SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-K

                   FOR ANNUAL AND TRANSITION REPORTS PURSUANT
             TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

                                   (Mark One)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                      For the year ended December 31, 1997

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the transition period from     to

                       Commissions file number: 333-18957

                         CLARK Material Handling Company

             (Exact name of registrant as specified in its charter)

                  Delaware                           61-1312827
       (State or other jurisdiction of              (IRS Employer
        incorporation or organization)            Identification No.)

               172 Trade Street
              Lexington, Kentucky                      40511
      (Address of registrant's principal             (Zip Code)
            executive offices)

Registrant's telephone number, including area code: (606) 288-1200

Securities registered pursuant to Section 12(b) of the Act:   None
Securities registered pursuant to Section 12(g) of the Act:   None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. 
Yes [ x ]    No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x ]

         As of  January 1, 1998,  there  were 1,000  shares of the  registrant's
common  stock  outstanding,  all of  which  were  owned by an  affiliate  of the
registrant.

                    Documents incorporated by reference: None

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<PAGE>

                         CLARK Material Handling Company
                       Index to Annual Report on Form 10-K

<TABLE>

                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
PART I..........................................................................................................3
   Item 1 -- BUSINESS...........................................................................................3
   Item 2 -- PROPERTIES.........................................................................................8
   Item 3 -- LEGAL PROCEEDINGS..................................................................................8
   Item 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................................9

PART II.........................................................................................................9
   Item 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..............................9
   Item 6 -- SELECTED FINANCIAL DATA............................................................................9
   Item 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
             AND RESULTS OF OPERATIONS.........................................................................11
   Item 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......................................................15
   Item 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
             AND FINANCIAL DISCLOSURE..........................................................................15

PART III.......................................................................................................15
   Item 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...............................................15
   Item 11 -- EXECUTIVE COMPENSATION...........................................................................16
   Item 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...................................17
   Item 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................20

PART IV........................................................................................................20
   Item 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.................................21

</TABLE>

                                       2
<PAGE>

     The  following  summary is qualified in its entirety by, and should be read
in conjunction  with,  the more detailed  information  and financial  statements
(including notes thereto)  included  elsewhere in this report.  Unless otherwise
indicated or the context  otherwise  requires,  references  to the  "Company" or
"CLARK" are to CLARK Material Handling Company  (including its predecessors) and
the other material  handling  operations  acquired from certain  subsidiaries of
Terex Corporation ("the  Predecessor's  Parent") pursuant to the Acquisition (as
defined) for periods prior to the  Acquisition  and to CLARK  Material  Handling
Company and its subsidiaries  for periods from and after the Acquisition,  after
giving effect thereto.

     The  Private  Securities  Litigation  Reform  Act of 1995  provides a "safe
harbor" for certain  forward-looking  statements.  Certain matters  discussed in
this  filing  could be  characterized  as forward  looking  statements,  such as
statements relating to plans for future expansion,  capital spending,  financing
sources  and  effects  of  regulation  and  competition.  Such  forward  looking
statements  involve  important risks and  uncertainties  that could cause actual
results  to differ  materially  from those  expressed  in such  forward  looking
statements.


                                     PART I

Item 1 -- BUSINESS

General

     CLARK is a leading international designer,  manufacturer, and marketer of a
complete line of forklift trucks including internal combustion trucks,  electric
riders,  narrow aisle stackers and powered hand trucks. The Company invented the
platform  truck in 1917,  the tow tractor in 1924, and the forklift in 1928, and
produced the first electric forklift in 1942. As a result of this innovation and
the  production  of more than one  million  forklifts  in its  80-year  history,
management  believes  CLARK(R)  is one of the  most  recognized  brand  names of
forklift trucks in North America.

     Management believes that CLARK has a large installed fleet in North America
with over  250,000  units,  and has a total of  approximately  350,000  units in
operation  worldwide.  This large  installed fleet has allowed CLARK to generate
significant   ongoing   replacement  parts  sales,   which  typically   generate
substantially  higher gross margins and provide a more stable  revenue base than
new truck  sales.  CLARK's  North  American  operations  generally  account  for
approximately 70% of its net sales and its European  operations  account for the
remaining 30%. CLARK distributes its products to a diverse customer base through
a global network of more than 290 dealers, with more than 560 locations, in more
than 80 countries.

     For  information   concerning  the  Company's  backlog  orders,  see  "Item
7--Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations -- Backlog."  Information  about industry and geographic  segments is
included  in  notes  1 and  13,  respectively,  to  the  Company's  consolidated
financial  statements  included  under  "Item  8  --  Financial  Statements  and
Supplementary Data."

The Acquisition

     The  Company  and  CMH  Holdings   Corporation,   a  Delaware   corporation
("Holdings"),  were formed by Citicorp Venture Capital Ltd. ("CVC"), and certain
members  of  management  of CLARK  (the  "Management  Investors")  to effect the
acquisition  (the  "Acquisition")  of  substantially  all the assets and certain
liabilities of Clark Material Handling Company, a Kentucky corporation,  and all
of the  outstanding  capital stock of certain of its  affiliates,  including its
German,  Korean,   Brazilian  and  Canadian  affiliates.   The  Acquisition  was
consummated on November 27, 1996 pursuant to a Stock and Asset Purchase and Sale
Agreement  dated as of  November  9, 1996  among the  Predecessor's  Parent  and
certain  of its  subsidiaries,  as  sellers,  and the  Company,  as  buyer  (the
"Acquisition  Agreement").  The aggregate  consideration for the Acquisition was
$139.5  million,  which was  subject to  certain  post-closing  adjustments.  To
finance the  Acquisition  (including  the payment of related fees and expenses):
(i) CVC,  Dr.  Martin M. Dorio,  President  and Chief  Executive  Officer of the
Company,  and Thomas J. Snyder, who was elected to the Board of Directors of the
Company in connection with the Acquisition, purchased $17.0 million of preferred
stock (the "Holdings Preferred Stock"), $1.0 million of voting common stock (the
"Holdings  Class A Stock") and non-voting  common stock (the  "Holdings  Class B
Stock", and together with the

                                       3
<PAGE>

Holdings Class A Stock, the "Holdings Common Stock"), and $7.0 million of junior
subordinated  debentures  (the  "Holdings  Debentures")  from Holdings for $25.0
million in cash; (ii) Holdings  contributed such $25.0 million to the Company in
exchange  for all of the  capital  stock of the  Company;  and (iii) the Company
issued and sold $130 million of 10 3/4% Senior Notes due 2006 (the "Notes").

     During   1997  CLARK   acquired,   in   purchase   business   combinations,
Hydroelectric Lift Trucks,  Inc.,  ("HLT"),  Blue Giant USA Corporation and Blue
Giant Canada Limited ("Blue Giant"). On February 28, 1997, the Company purchased
substantially  all of the assets of HLT, a supplier of upright material handling
equipment.  The Company's  acquisition  of Blue Giant was effective  November 1,
1997, when it purchased,  in two separate business  combinations,  substantially
all of the assets  and  certain  liabilities  of Blue  Giant.  See note 4 to the
Company's consolidated financial statements.


Products

     CLARK  currently  offers over 100 truck  designs  within five major product
lines:  light internal  combustion  ("IC") trucks (with a capacity of 1.0 to 5.0
tons),  heavy IC trucks  (with a  capacity  of 5.5 to 16.5  tons),  narrow-aisle
trucks  (with a capacity of 1.5 to 2.5 tons),  electric  counterbalanced  riders
(with a capacity of 1.3 to 6.0 tons), and manual and powered hand trucks (with a
capacity of 2.0 to 4.0 tons).

     Light IC trucks,  used for general warehousing needs, are generally powered
by  liquid  propane.   Such  trucks  are  well  suited  for   manufacturing  and
distribution  applications that require a high degree of maneuverability.  Heavy
IC trucks are specialty  products designed for use in more demanding  situations
such as heavy  manufacturing or container  handling  applications.  Narrow-aisle
trucks  provide  solutions for high density  storage needs and operate in six to
eight  foot   aisles  and  reach   heights  of  more  than  30  feet.   Electric
counterbalanced riders,  designed for indoor use in warehousing,  manufacturing,
distribution  and other  applications,  are powered by a  rechargeable  electric
battery.   Management   estimates  that  light  IC  trucks,   heavy  IC  trucks,
narrow-aisle trucks and electric  counterbalanced riders represent approximately
58%,  3%, 15% and 24% of the unit volume of the forklift  rider truck  industry,
respectively.  Powered hand trucks are generally used in the  transportation and
order-selecting businesses.

     CLARK tailors its products to meet customers'  particular material handling
needs.  To further meet these needs,  CLARK adds  attachments  such as container
handlers, side shifters, roll clamps, block handlers,  carton clamps, push-pulls
(slip-sheet) and fork positioners.

     Rapid   development  and  introduction  of  new  and  redesigned   products
incorporating  the latest  materials  handling  technology is a key component of
CLARK's  strategy.  Management  believes that CLARK has introduced  more new and
redesigned  models in the last three years than any other major  forklift  truck
manufacturer  and plans to  continue a rapid pace of new  product  introduction.
CLARK  maintains an  engineering  staff that is  responsible  for  designing new
products and improving existing product lines.

     Since 1993, CLARK has redesigned a substantial portion of its product line.
In December 1994, CLARK introduced the 2-3 ton Genesis(R) IC truck targeting the
light IC market.  CLARK  invested  approximately  $15.0  million to develop  the
Genesis(R)   truck.   The  Genesis(R)   truck  provides   improved   ergonomics,
performance, reliability, serviceability, and provides higher gross margins than
its predecessor, primarily due to its lower production cost.

     CLARK's European  subsidiaries  ("CLARK Europe")  introduced the Genesis(R)
2-3 ton gas and diesel  MegaStat(TM) model in April 1995. The Genesis(R) 2-3 ton
MegaStat(TM) IC received the "General Lift Truck  Innovation" award in 1996 from
the Fork Truck Association in the United Kingdom.

     In 1996, CLARK continued to expand its Genesis(R)  family with the addition
of a 4-5.5 ton  pneumatic  tired IC lift truck,  and a 2 - 3.2 ton electric four
wheel sit down rider. CLARK also made significant  additions to its narrow aisle
stacker  product line,  which was expanded to include  double reach and straddle
models.

                                       4
<PAGE>

     During 1997, CLARK added three more trucks to its Genesis(R)  family, a 4.0
- 5.0 ton cushion  tired IC lift truck , a 6.0 - 7.0 ton  cushion  tired IC lift
truck,  and a 1.2 - 2.5 ton three  wheel  electric  sit down  rider.  CLARK also
expanded its Genesis(R)  heart-of  -the-line 2-3 ton IC trucks by increasing the
capacity to 3.2 tons and adding a 3.0 liter GM engine option.

     In 1997, CLARK purchased Blue Giant and HLT. Blue Giant will produce a full
line of CLARK  branded  manual and powered  walkie pallet trucks and stackers as
well as continue to produce  and sell under the Blue Giant  name.  HLT  produces
forklift masts mainly for CLARK's own use.


Aftermarket Parts

     Since the Company's  inception,  more than one million forklift trucks have
been manufactured by CLARK and its predecessors, and it currently has in service
approximately  350,000 trucks  worldwide,  with  approximately  250,000 in North
America, 70,000 in Europe, and 30,000 in other international markets, generating
a substantial  aftermarket parts business for CLARK. CLARK's worldwide installed
fleet of  approximately  350,000  forklift trucks  generates an estimated $240.0
million  in  annual  global   aftermarket   parts  sales,  of  which  CLARK  has
historically  captured an estimated  40% share.  Clark  supplies  both  original
equipment parts to fit CLARK brand forklifts and Totalift (R) parts to fit other
brands.

     CLARK's parts  distribution  operation  undertakes  purchasing and customer
services for aftermarket parts. CLARK distributes its aftermarket parts in North
America through a distribution center in Southaven, Mississippi, (the "Southaven
Facility"),  in Europe through a warehouse located in Saarn, Germany and for the
International Operations of CLARK, through two sales and distribution facilities
located in Seoul, Korea and the State of Sao Paulo, Brazil, respectively.  CLARK
shares the Southaven Facility with the Predecessor's Parent and, pursuant to the
Acquisition, CLARK and the Predecessor's Parent entered into a Service Agreement
providing  for the  continued  use by CLARK of such  facility.  For  information
regarding the Service Agreement, see "Item 13--Certain Relationships and Related
Transactions--Service Agreement."

Manufacturing Operations

     CLARK's Lexington, KY facility produces both IC and electric forklifts with
lift  capacities  ranging  from 1-17.5 tons and is equipped  with five  assembly
lines and two heavy IC assembly  bays.  The  Lexington  facility is primarily an
assembly  operation with welding and painting  capabilities,  operates one shift
per day, and produces an average of 60 lift trucks per day. In 1996, the Company
made a commitment to achieve ISO-9001  certification for the Lexington facility.
A formal audit was conducted in June 1997.  Certification  was awarded in August
1997,  indicating  that the Company has achieved and  sustained a high degree of
quality and consistency with respect to its products.

     CLARK Europe's Mulheim  manufacturing  facility  produces both IC forklifts
(Diesel,  LP gas and natural gas) with  hydrodynamic  as well as  electronically
controlled  hydrostatic  drive  (MegaStat(TM))  and electric  powered  forklifts
equipped with D/C as well as frequency-controlled A/C motors (MegaAC(TM)) in the
capacity range of 1-5 tons. The Mulheim  facility is equipped with four assembly
lines,  one for electric  trucks,  two for IC trucks and one for  uprights.  The
manufacturing  process includes  pre-production and welding production of frames
and  uprights  and a powder dry paint  system was  recently  installed to ensure
high-quality painting of frames and uprights.  CLARK Europe's facility currently
operates  one shift per day and  produces  an average of 25 lift trucks per day.
The Mulheim facility has also been awarded ISO-9001 certification.

     Blue  Giant  has two  locations,  one in  Pell  City,  Alabama,  and one in
Brampton,  Ontario,  Canada.  The  Pell  City,  Alabama  facility  produces  tow
tractors,  pallet  trucks  and  dock  equipment  and  its  capabilities  include
machining, welding, paint and assembly. The Brampton, Ontario facility, produces
dock  equipment,  walkie and walkie stacker  forklifts and scissor lifts and its
primary  operations  include  machining,  welding,  assembly and  painting.  The
Brampton facility is ISO-9001 certified. HLT is located in Wilmington, Ohio, and
produces  forklift  mast in  support  of the CLARK  Lexington  plant's  forklift
production.  HLT's primary operations are welding, painting and assembly and the
facility operates two shifts per day.

                                       5

<PAGE>

Dealer Network

     CLARK markets both original  equipment and parts through a worldwide dealer
network.  CLARK currently has approximately  100 independent  dealers in each of
North America and Europe and owns three dealers in Europe. In addition,  outside
of North America and Europe,  CLARK markets and  distributes its export products
through  95  distributors  operating  in the  Asian,  African,  Middle  Eastern,
Caribbean and Latin American markets. CLARK's dealers and distributors generally
market  the  full  CLARK  product  line  and  maintain   comprehensive   service
capabilities.  CLARK's  sales  organization  coordinates  sales and  promotional
activities,   provides   ongoing   dealer   training  and   facilitates   dealer
communications.  CLARK  sells to a  diversified  customer  base,  with no single
customer accounting for more than 5% of total sales.

Suppliers

     The Company strategically relies upon outside suppliers for a vast majority
of the  individual  components  of a lift truck.  Management  believes that such
outsourcing  allows CLARK greater  flexibility  in varying its cost structure in
response to changing market conditions.

     Principal  materials used by CLARK in its various  manufacturing  processes
include steel, castings, engines, tires, electric controls, uprights, transaxles
and motors,  and a variety of other  fabricated  or  manufactured  items.  While
substantially   all  such  materials  are  typically   available  from  multiple
suppliers, CLARK depends exclusively upon certain suppliers of key parts used in
its  lift  trucks.  From  time  to  time,  certain  of  CLARK's  suppliers  have
experienced difficulties in meeting CLARK's production schedules. The failure of
a key supplier to meet the Company's  requirements on a timely basis or the loss
of a key supplier could lead to delays in the Company's manufacturing operations
and have a material adverse effect on the Company.

Competition

     CLARK  produces one of the leading  forklift truck brands in North America,
although  NACCO  Industries,  Inc.,  ("NACCO"),  through  its  Hyster  and  Yale
divisions,  produces more forklift trucks annually.  In addition to NACCO, other
major  North  American  competitors  include  Toyota  Industrial  Equipment/TMS,
Mitsubishi  Caterpillar  Forklift  America Inc.,  Nissan  Forklift  Corp.  North
America,  Komatsu  Forklift  USA Inc.  and Daewoo in both IC trucks and electric
riders,  and Crown  Equipment  Corp. and Raymond  Corporation in electric riders
alone. In Europe,  CLARK competes with Linde AG, the European market leader,  as
well as Jungheinreich AG, Toyota Industrial Equipment/TMS, and NACCO. CLARK also
competes with a number of specialty manufacturers.

     The truck market in which the Company competes is highly  competitive.  The
Company encounters significant competition  particularly from lower cost foreign
competitors,  including  manufacturers  located in Japan and Korea.  The Company
competes on the basis of quality, price, on-time delivery, product line, ease of
use, safety,  comfort and customer  service.  Many of the Company's  competitors
have greater financial resources than the Company. Additionally,  certain of the
Company's  products  are  subject to  changing  technology  that could place the
Company  at a  competitive  disadvantage  relative  to  product  innovations  by
competitors.  There can be no assurance that the Company will be able to achieve
the technological advances that may be necessary to remain competitive.

Intellectual Property

     The Company  relies on a combination of  trademarks,  service marks,  trade
names, patents, licensing arrangements,  trade secrets, know-how and proprietary
technology  to  secure  and  protect  its  intellectual   property  rights.   In
particular, the Company's CLARK(R), Clarklift(R), Powrworker(R), Genesis(R), and
Blue Giant(R) trademarks are of particular importance to the Company's business.
The Company is currently  undertaking to obtain trademark  registrations for its
MegaValve (TM),  MegaStat (TM), MegaPro (TM), and MegaAC (TM) marks. The loss of
the Company's rights under one or more of the Company's  trademarks could have a
material adverse effect on the Company's business.

     There can be no assurance  that the Company will be successful in obtaining
approval of any present or future  patent or  trademark  applications;  that any
patents,  patent  applications  and patent  licenses will  adequately  cover the
Company's  technologies or protect the Company from potential  infringements  by
third  parties;  that any  nondisclosure  and  confidentiality  agreements  will
provide  meaningful  protection  for the Company's  trade  secrets,  know-how or
proprietary  technology  in the event of any  unauthorized  use or disclosure of
such  information; or that

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<PAGE>

others  will not obtain  access to, or  independently  develop  technologies  or
know-how  similar to, that of the Company.  There also can be no assurance  that
future litigation by the Company will not be necessary to enforce its trademark,
patent and other  proprietary  rights,  or to defend the Company against claimed
infringement of the rights of others, adverse determinations in which could have
a material adverse effect on the Company.

Employees

     As  of  December  31,  1997,   CLARK's   total  work  force   consisted  of
approximately 1,450 salaried, hourly and temporary employees. Of these employees
1,000 are in the Company's North American operations and 450 work in the foreign
operations.

     In Europe, the Mulheim facility at Saarn is represented by the German Metal
Workers  (Industrie  Gewerkschaft  Metal) and the aftermarket  parts facility at
Saarn is  represented  by the German  Union for Trading,  Banking and  Insurance
(Gewerkschaft  Handel,  Banken und  Versicherungen).  The Mulheim facility has a
total work force of approximately 350, of which approximately 200 are members of
the German Metal  Workers,  and the  aftermarket  parts  facility at Saarn has a
total workforce of  approximately  65, of which  approximately 20 are members of
the German  Union for  Trading,  Banking and  Insurance.  There are no contracts
between CLARK and the unions,  but CLARK follows standard practices by complying
with contracts between the unions and the employers' association.

     The union employees of the  Predecessor's Parent at the Southaven  Facility
engaged in a labor dispute  beginning in 1995, which had a short-term  effect on
the Company's  distribution  operations  at the facility but had no  appreciable
effect on the  conduct  of  business  or results  of  operations.  See "Item 1 -
Business - Aftermarket  Parts".  Although such union  employees filed a petition
with the National Labor Relations Board in May 1996 for  decertification  of the
union,  there can be no assurance  that similar labor disputes will not occur in
the future which, depending upon the timing and duration of such disputes, could
have a material adverse effect on the Company.

     Management  believes that its  relationships  with its employees and unions
are good.

Environmental Matters

     As with most industrial companies,  the Company's facilities and operations
are required to comply with and are subject to liability  under federal,  state,
local and foreign  environmental and worker health and safety laws,  regulations
and ordinances, including those relating to air emissions, wastewater discharges
and the  management  and disposal of certain  materials,  substances  and wastes
("Environmental  Laws").  Certain  of these  Environmental  Laws hold  owners or
operators of land or businesses liable for their own and for previous owners' or
operators'  releases of  hazardous  or toxic  substances,  materials  or wastes,
pollutants  or  contaminants,   including,  in  some  instances,  petroleum  and
petroleum  products.  Compliance  with  Environmental  Laws also may require the
acquisition  of permits  or other  authorizations  for  certain  activities  and
compliance  with various  standards  or  procedural  requirements.  Although the
Company believes that its operations are in substantial  compliance with current
regulatory requirements under material applicable Environmental Laws, the nature
of the Company's  operations  and the history of industrial  uses at some of its
facilities  expose the Company to the risk of liabilities or claims with respect
to environmental and worker health and safety matters. The Company may also have
contingent  responsibility for liabilities with respect to environmental matters
arising  in  connection  with the  prior  operations  of the  material  handling
business of CLARK Equipment Company, a predecessor of the Company ("CEC"). There
can be no assurance that material  costs or liabilities  will not be incurred in
connection with such liabilities or claims.

     In connection  with the  Acquisition,  the Company  agreed to indemnify the
Predecessor's  Parent and hold it harmless from and against all losses which are
incurred or suffered by the Predecessor's  Parent with respect to or arising out
of the Company's  business and assets except for such losses which arise from or
are in connection with any real property, business entities or assets which were
not acquired as part of the Acquisition  (which the Predecessor's  Parent agreed
to retain  responsibility for and indemnified the Company against).  No specific
environmental losses were identified by the parties in the Acquisition Agreement
nor are  there  any known  material  losses  which  have  been  asserted  by the
Predecessor's  Parent pursuant to the environmental  indemnity provisions of the
Acquisition Agreement or incurred by the Company. The environmental  indemnities
are subject to certain deductibles,  caps and time limitations  depending on the
nature of the environmental claim.

                                       7
<PAGE>
 
     Based upon the Company's experience to date and the indemnities obtained in
connection with the  Acquisition,  the Company  believes that the future cost of
compliance   with   existing   Environmental   Laws  (or   liability  for  known
environmental  liabilities or claims) should not have a material  adverse effect
on the  Company's  business,  financial  condition  or  results  of  operations.
Compliance with such laws has, and will, require  expenditures by the Company on
a  continuing  basis.  Future  events,  such as  changes  in  existing  laws and
regulations  or their  interpretation,  may give rise to  additional  compliance
costs or liabilities  that could have a material adverse effect on the Company's
business,  financial  condition or results of operations.  Compliance  with more
stringent laws or regulations,  as well as more vigorous enforcement policies of
regulatory  agencies or stricter or different  interpretations of existing laws,
may require additional expenditures by the Company that may be material.

Item 2 -- PROPERTIES

     The Company's headquarters are located in Lexington,  Kentucky. The Company
currently  owns or leases 13 facilities  in North  America,  Europe,  Brazil and
Korea which are used for  manufacturing,  distribution,  sales,  warehousing and
service center activities.

     The following  table outlines the principal  facilities  owned or leased by
CLARK or its subsidiaries:

<TABLE>
<CAPTION>

                      Facility Location                          Type of Facility
                      -----------------                          ----------------

<S>               <C>                                     <C>
                  Lexington, Kentucky                     Manufacturing, warehouse and office
                  Lexington, Kentucky *                   Sales, training and engineering
                  Lexington, Kentucky                     Warehouse
                  Mulheim-Ruhr, Germany **                Manufacturing, engineering, power generation, maintenance and office
                  Saarn, Germany                          Warehouse
                  Barcelona, Spain                        Sales branch
                  Paris, France                           Sales branch
                  Lyon, France                            Sales branch
                  State of Sao Paulo, Brazil              Parts distribution
                  Seoul, Korea                            Parts distribution and office
                  Wilmington, Ohio                        Manufacturing, warehouse and office
                  Pell City, Alabama                      Manufacturing, warehouse and office
                  Brampton Ontario, Canada *              Manufacturing, warehouse and office
</TABLE>


----------
*        Owned.
**       A portion of the facility is owned.

     CLARK also owns a  manufacturing  facility  in  Banwaal,  Korea,  which was
closed in the  fourth  quarter  of 1994 and is  presently  held for sale.  CLARK
Europe also presently leases unoccupied office space in Mulheim-Ruhr, Germany.

     Management  believes  that the  Company's  facilities  are suitable for its
operations and provide  sufficient  capacity to meet the Company's  requirements
for the foreseeable future.


Item 3 -- LEGAL PROCEEDINGS

     From time to time product liability claims are asserted against the Company
for various  injuries  alleged to have resulted from defects in the  manufacture
and/or  design of its  products.  As of December  31,  1997,  the Company had 76
pending  lawsuits  relating  to claims  arising  from  accidents  involving  its
products.  Most of these lawsuits are in various stages of pretrial  completion,
and certain plaintiffs are seeking punitive as well as compensatory damages. The
Company is  self-insured,  up to certain  limits,  for these  product  liability
claims, as well as certain  exposures  related to general workers'  compensation
and automobile liability. The Company has

                                       8

<PAGE>

recorded and maintains on its balance sheet  reserves  relating to the estimated
liability,  based  in  part  upon  actuarial  determinations,  of the  Company's
aggregate  exposure  for such  self-insured  risks.  The  Company is involved in
various other legal  proceedings,  which have arisen in the normal course of its
operations.  The  Company  has  recorded  provisions  for  estimated  losses  in
circumstances  where a loss is  probable  and the  amount  or range of  possible
amounts of the losses is  estimable.  There can be no assurance  that any of the
foregoing reserves are adequate.

     The  Company  is  contingently  liable as a  guarantor  for  certain of its
dealers' and customers' financing arrangements with financial institutions.  The
guarantees under these financing arrangements aggregated  approximately $137,000
at December 31, 1997,  which is consistent with prior years.  Historically,  the
Company and the Predecessor  have incurred only minimal losses relating to these
arrangements.  The  unfavorable  resolution of product  liability  claims or any
other contingencies or uncertainties in the future could have a material adverse
effect on the Company.

Item 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no  matters  submitted  to a vote of  security  holders  for the
period ended December 31, 1997.


                                     PART II

Item 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's  common equity is not publicly  traded and,  accordingly,  an
established  market  does not exist for such  common  equity.  The  Company is a
wholly owned  subsidiary of Holdings.  For certain  information  concerning  the
ownership of Holdings Preferred Stock and Holdings Common Stock, see "Item 12 --
Security Ownership of Certain Beneficial Owners and Management."

     No  dividends  have been paid on the  Company's  common  equity.  There are
certain  limitations  on the payment of  dividends  in the  Company's  borrowing
arrangements.

                                       9

<PAGE>


Item 6 -- SELECTED FINANCIAL DATA

     Through   November  26,  1996,   the  Company   operated  as  wholly  owned
subsidiaries of the Predecessor's  Parent. On November 27, 1996, the Company was
acquired by Holdings.  Accordingly,  the selected  financial data shown below is
not  necessarily  comparable  as a result  of these  ownership  changes  and the
resulting   adjustments  required  for  purchase  business   combinations  under
generally accepted accounting principles.

     The information  contained in this table should be read in conjunction with
"Item 7 --  Management's  Discussion  and  Analysis of Financial  Condition  and
Results of  Operations"  and the  Company's  consolidated  financial  statements
included under "Item 8--Financial Statements and Supplementary Data."

<TABLE>
<CAPTION>


                                              Wholly Owned Subsidiaries of the
                                                   Predecessor's Parent                       The Company
                                       ---------------------------------------------- ----------------------------
                                                                     Eleven Months     One Month
                                             Years Ended                  Ended           Ended       Year Ended
                                             December 31,            November 26,     December 31,    December 31,
                                       ------------------------
                                       1993     1994       1995           1996            1996           1997
                                       ----     ----       ----           ----            ----           ----
<S>                              <C>       <C>        <C>           <C>              <C>            <C> 

Operating Data:
Net Sales                             $395.6    $472.7     $528.8        $404.6      |    $46.8          $489.3
Gross Profit (1)                        22.3      42.9       44.2          45.6      |      4.9            58.2
Engineering, selling and                                                             |
    administration expenses (1) (2)     50.9      50.2       37.6          32.3      |      3.0            37.1
Income (loss) from operations (3)      (28.6)    (14.0)       3.1          13.3      |      1.9            21.0
Income (loss) before                                                                 |
    extraordinary items and                                                          |
    cumulative effect of change                                                      |
    in accounting (2) (3)              (44.9)    (25.3)     (17.4)         (2.1)     |       .5             7.9
Balance sheet data (at end                                                           |
    of period):                                                                      |
Working capital (4)                     50.8      41.4       46.4          51.4      |     45.0            55.8
Net property, plant and                                                              |
    equipment                           75.3      60.7       58.2          51.2      |     51.0            47.8
Total assets                           208.0     194.7      192.7         192.7      |    301.3           313.3
Long-term obligations (5)              120.0     125.9      143.0         151.3      |    133.6           133.9
                                                                                     |

------------

</TABLE>


(1)    Certain  reclassifications  of prior years have been made to conform with
       the current year presentation.

(2)    Includes corporate charges allocated by the Predecessor's  Parent of; (a)
       $4.4 million,  $8.5 million and $7.0 million in the years ended  December
       31, 1993, 1994 and 1995, respectively; and (b) $5.7 million in the eleven
       month period ended November 26, 1996.

(3)    Includes  severance  and exit charges of $6.7 million and $3.5 million in
       the years ended December 31, 1994 and 1995, respectively.

(4)    Calculated  as net trade  receivables  plus net  inventories  less  trade
       payables.

(5)    The amounts of long-term  obligations  as of December 31, 1993,  1994 and
       1995,  and  November 26,  1996,  include Due to Parent of $40.2  million,
       $68.5  million,  $87.6  million  and $96.4  million,  respectively;  such
       amounts also include the long-term portion of capital lease  obligations.
       At  December  31,  1996 and  1997 the  amount  of  long-term  obligations
       includes  the  Notes  and  the   long-term   portion  of  capital   lease
       obligations.

                                       10

<PAGE>

Item 7 --  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND
RESULTS OF OPERATIONS

General

     CLARK  experienced  operating losses of $28.6 million and $14.0 million for
the years ended  December  31, 1993 and 1994,  respectively.  These  losses were
largely due to high operating  expenses and cash constraints.  Since 1993, CLARK
has undertaken a series of initiatives aimed at reducing fixed costs, developing
a largely  variable cost  structure  and  maximizing  the  Company's  ability to
respond  to market  changes.  These  initiatives  involved  (i)  elimination  of
redundant manufacturing and distribution facilities,  (ii) head-count reductions
involving termination of over 600 employees,  representing  approximately 40% of
the Company's  workforce,  (iii) elimination of non-core,  unprofitable  product
lines  and  (iv)  greater   reliance  on   outsourcing.   In  addition  to  cost
rationalization, the Company has redesigned a significant portion of its product
portfolio.  The Company's new and  redesigned  products have earned higher gross
margins due to their lower production  costs. As a result of these  initiatives,
CLARK'S operating earnings have steadily improved since 1993.

     The  Company  manufactures  products  in the U.S.  and  Germany  and  sells
products in more than 80 countries  worldwide.  A portion of the  Company's  raw
materials  are  acquired  from  foreign  suppliers  and  denominated  in foreign
currencies.  Consequently,  the  Company's  operating  results  are  subject  to
fluctuations in foreign currency  exchange rates, as well as, the translation of
its foreign operations into U.S. dollars. The risks associated with operating in
foreign countries could adversely affect the Company's future operating results.
In addition, currency fluctuations could improve the competitive position of the
Company's foreign  competitors if the value of the U.S. dollar rises in relation
to the local  currencies of such  competitors.  The Company has not historically
hedged its foreign currency risk.

     Sales of products  manufactured  and sold by the Company have  historically
been  subject to  cyclical  variation  based,  among  other  things,  on general
economic  conditions.  Management  believes  that the Company has  improved  its
ability to sustain profitability in changing market conditions.  There can be no
assurance, however, as to the magnitude or timing of any decline or recovery, or
that any future decline will not have a material adverse effect on the Company's
business.

Results of Operations

<TABLE>
<CAPTION>

                        Wholly Owned Subsidiaries of the Predecessor's Parent                          The Company
                        -----------------------------------------------------          ----------------------------------------

                             Year Ended         Eleven Months Ended                    One Month Ended           Year Ended
                          December 31, 1995       November 26, 1996                    December 31, 1996      December 31, 1997
                           ($)         (%)         ($)         (%)                     ($)          (%)         ($)        (%)
                                                                 (dollars in millions)

<S>                          <C>       <C>        <C>          <C>                    <C>        <C>           <C>        <C> 
Net Sales                    $528.8    100.0%     $404.6       100.0%            |    $46.8      100.0%        $489.3     100.0%
Gross Profit (1)               44.2      8.4%       45.6        11.3%            |      4.9       10.5%          58.2      11.9%
                                                                                 |         
Engineering, Selling           37.6      7.1%       32.3         8.0%            |      3.0        6.4%          37.1       7.6%
and Administrative                                                               |
Expenses (1) (2)                                                                 |
Income from Operations(2)(3)    3.1      0.6%       13.3         3.3%            |      1.9        4.0%          21.0       4.3%

</TABLE>

----------

(1)    Certain reclassifications of prior year amounts have been made to conform
       with the current year presentation.
(2)    Includes corporate charges allocated by the Predecessor's Parent of, $7.0
       million and $5.7 million in the years  ending 1995 and the eleven  months
       ended November 26, 1996, respectively.
(3)    Includes  severance  and exit charges of $6.7 million and $3.5 million in
       the years ended December 31, 1994 and 1995, respectively.

Fiscal Year Ended  December  31, 1997  compared to the month ended  December 31,
--------------------------------------------------------------------------------
1996, and the eleven months ended November 26, 1996
---------------------------------------------------

     The  acquisition  of the  Company  on  November  26,  1996,  resulted  in a
significant  change in the Company's  capital structure and a revaluation of the
Company's  assets and  liabilities in accordance with the provisions of purchase
accounting  required by generally accepted accounting  principles.  Accordingly,
the  results  of  operations  for the year  ended  December  31,  1997,  are not
comparable to the results of operations  for the month ended  December 31, 1996,
and the eleven-month  period ended November 26, 1996, or the year ended December
31, 1995.

                                       11
<PAGE>

Net Sales
---------

         Net sales were $489.3  million in 1997, an increase of $37.9 million or
8.4% from $451.4  million in the twelve month  period  ended  December 31, 1996.
Truck sales increased $38.1 million and parts sales were relatively  consistent.
The increase in truck sales was primarily due to improved  market  conditions in
1997 and the  acquisition  of Blue Giant USA  Corporation  and Blue Giant Canada
Limited which increased  sales by $4.8 million or 1.2%.  CLARK derived 73.5% and
25.7%  its net  sales  from its  North  American  operations  and  CLARK  Europe
respectively, compared to 68.6% and 31.4%, respectively in 1996. A change in the
German Deutsche mark ("DM") annual average currency  translation rate from 1.505
DM to one U.S.  dollar  for 1996 to 1.734 DM to one U.S.  dollar  for 1997 had a
negative  impact  on  reported  sales  (and  income)  in U.S.  dollars  from the
Company's European operations.

Gross Profit
------------

         Gross profit increased $7.7 million, or 15.2%, to $58.2 million in 1997
from $50.5 million in 1996. As a percentage of net sales, gross profit was 11.9%
and  11.2%  for  1997 and  1996  respectively.  Increased  sales  accounted  for
approximately  $4.6 million of the increased gross profit and lower costs due to
the  Company's  cost  reduction  efforts in the area of  materials,  labor,  and
overhead accounted for the balance of the improvement.

Engineering, Selling and Administrative Expenses
------------------------------------------------

         Engineering,  selling and  administrative  expenses  increased  by $1.8
million to $37.1 million for the twelve months period ended December,  1997 from
$35.3  million for the twelve  month period  ended  December  31, 1996.  Certain
administrative  functions  performed by the Predecessor's  Parent were replaced,
but at a lower  cost  than  was  charged  by the  parent  in 1996.  The  Company
increased its engineering and selling  expenses $4.4 million.  This increase was
to support new product and sales  initiatives  in 1997 and beyond.  Engineering,
selling and administrative expenses expressed as a percentage of sales were 7.6%
and 7.8% respectively in 1997 and 1996.

Income from Operations
----------------------

         Income from operations  increased $5.8 million to $21.0 million for the
twelve-month   period  ended  December  31,  1997  from  $15.2  million  in  the
twelve-month  period in 1996.  This increase was due to the reasons noted above.
Income from operations  expressed as a percentage of net sales was 4.3% and 3.4%
for  the  twelve   months  ended   December  31,  1997  and  December  31,  1996
respectively.

Eleven Months Ended November 26, 1996 Compared to Year Ended December 31, 1995
------------------------------------------------------------------------------

Net Sales
---------

         Net sales were $404.6  million for the eleven months ended November 26,
1996 compared to $528.8 million for the twelve-month  period in 1995, a decrease
of $124.2 million or 23.5%. This decrease was primarily due to reduced demand by
CLARK's  customers,  which  management  believes  was related to lower  industry
activity beginning in the last quarter of 1995. Net truck sales decreased $112.6
million, or 26.0%, primarily due to a softening in the demand for lift trucks in
North America and Europe,  while parts sales declined 12.1%. CLARK derived 68.8%
and 31.2% of its net sales from its North American  operations and CLARK Europe,
respectively,  in the eleven months ended November 26, 1996, and 69.3% and 30.7%
respectively, in the twelve months ended December 31, 1995.

Gross Profit
------------

         Gross profit increased $1.4 million,  or 3.2%, to $45.6 million for the
eleven months ended November 26, 1996,  compared to $44.2 million for the twelve
month period in 1995, despite the 23.5% decline in net sales. As a percentage of
net sales,  gross profit was 11.3% and 8.4% for the eleven months ended November
26,  1996 and the twelve  month  period of 1995,  respectively.  Cost  reduction
efforts and production improvements accounted for most of this increase. Factory
overhead expenses were reduced by $13.9 million.  Of this amount,  $10.1 million
was

                                       12

<PAGE>

attributable to lower salaries,  wages and benefits.  Other significant areas of
cost decreases  included lower product liability costs,  lower freight costs and
lower  material  costs  from  improved  outsourcing.   These  improvements  were
partially  offset by lower  absorption  of fixed  costs due to lower  production
levels and by lower  margins  for  aftermarket  parts due to a change in product
mix.

Engineering, Selling and Administrative Expenses
------------------------------------------------

         For the eleven months ended November 26, 1996, engineering, selling and
administrative  expenses  decreased  $5.3  million to $32.3  million  from $37.6
million for the twelve month period in 1995 primarily due to the rationalization
of staff  levels,  facilities  and support  costs in response to lower  industry
activity.  Engineering,  selling and administrative  expenses as a percentage of
net sales were 8.0% and 7.1% in the eleven  months  ended  November 26, 1996 and
twelve months ended December 31, 1995, respectively.

Income from Operations
----------------------

         Income from operations increased $10.2 million to $13.3 million for the
eleven months ended  November 26, 1996,  compared to $3.1 million for the twelve
months ended December 31, 1995. In addition, CLARK had $3.5 million of severance
and  exit  charges  related  to  workforce  rationalization  in  Europe  and the
termination  of  certain  leases,  in 1995,  which  did not  recur in 1996.  The
Predecessor's  Parent allocated  corporate  charges to CLARK of $5.7 million and
$7.0 million in the 1996 and 1995 periods. Income from operations,  expressed as
a  percentage,  of net sales  were  3.3% and 0.6% for the  eleven  months  ended
November 26, 1996 and the twelve months ended December 31, 1995, respectively.

Backlog

         The  Company's  backlog of orders at December 31, 1997 and December 31,
1996 were $114.8 million and $80.4 million,  respectively.  Substantially all of
the Company's backlog orders are expected to be filled within one year, although
there can be no assurance  that all such orders will be filled  within that time
period.  The  cancellation  or delay of  certain  orders  could  have a material
adverse effect on the Company.

Capital Resources, Liquidity and Financial Condition

         The Company's  business is capital  intensive and requires  funding for
purchases of production and replacement parts inventories,  capital expenditures
for  repair,  replacement  and  upgrading  of  existing  facilities  as  well as
financing of accounts  receivables from customers and dealers.  The Company will
continue to have  significant debt service  requirements.  On December 31, 1997,
the Company had $6.6 million of cash, cash equivalents and cash securing letters
of credit,  $130.0  million of long-term debt and $6.6 million of capital leases
obligations.   The  Company's  overall   financial   condition  did  not  change
significantly  at December 31, 1997 from  December 31,  1996.  However,  working
capital (defined as receivables and inventories  less payables)  increased $10.8
million  primarily  as a result of more  rapid  payment of  accounts  payable by
taking advantage of vendor discounts for prompt payment, and the acquisitions of
HLT and Blue Giant.  This increase was partially offset by declines in the value
of the DM which reduced the working capital of the Company's European operations
when converted to U.S.  dollars.  The  fluctuation  in the German  currency also
resulted in a substantial  increase in the currency  translation amount included
within stockholder's equity.

         Cash provided by operating  activities for 1997 was $11.1 million,  and
the Company's cash levels were down $10.2 million from December 31, 1996 levels.
The Company had $6.3  million of capital  expenditures  including  tooling,  new
products and systems  modernization  expenditures,  for the twelve months ending
December  31, 1997  compared  to $3.5  million of capital  expenditures  for the
twelve months ending December 31, 1996. The Company purchased  substantially all
the  assets  of HLT  on  February  28,  1997,  in  exchange  for a $4.9  million
short-term  note,  which matured and was paid in the second  quarter of 1997. In
addition  to paying  the note  issued to acquire  HLT,  the  Company  closed its
acquisition  of the Blue Giant in two separate  purchase  business  combinations
using  existing cash of $9.7 million (see note 4 to the  consolidated  financial
statements  ). The Company also made the interest  payments of $13.5  million on
its  10  3/4  %  Senior  Notes.  The  Company's   ability  to  incur  additional
indebtedness is somewhat  restricted by the covenants set forth in the Company's
borrowing arrangements.

                                       14

<PAGE>

         In connection  with the  Acquisition,  the Company entered into a $30.0
million  revolving credit facility (the "Revolving Credit  Facility"),  which is
secured by the  accounts  receivable  and  inventory of the  Company's  domestic
operations,  excluding HLT and Blue Giant.  The Revolving Credit Facility has an
aggregate undrawn availability of $29.2 million at December 31, 1997, subject to
the borrowing  conditions  contained  therein.  Management  believes that it has
adequate  available  borrowing  capacity under the Revolving  Credit Facility to
cover its foreseeable working capital requirements for fiscal 1998 and that cash
flow from  operations  and its borrowing  arrangements  will be adequate to meet
other liquidity and capital needs in 1998.

         As of  December  31,  1997,  the Company  was not in  violation  of any
covenants or  restrictions  in the  Revolving  Credit  Facility or the indenture
governing the Notes.

Contingencies, Commitments and Uncertainties

         From time to time product  liability  claims are  asserted  against the
Company  for  various  injuries  alleged to have  resulted  from  defects in the
manufacture and/or design of its products. In addition,  the Company is involved
in various  other legal  proceedings,  which have arisen in the normal course of
its operations. See "Item 3-Legal Proceedings."

         The Company is  contingently  liable as a guarantor  for certain of its
dealers' and customers' financing arrangements with financial institutions.  The
guarantees under these financing arrangements aggregated  approximately $137,000
at December 31, 1997,  which is consistent with prior years.  Historically,  the
Company and the Predecessor  have incurred only minimal losses relating to these
arrangements.

         CLARK is  contingently  liable  for a portion of the  related  value of
machines  sold to and  leased  by a third  party to users  for  terms  generally
ranging from three to five years.  CLARK  repurchases  certain  machines  leased
under this  program and then sells or leases such  machines to other  users.  At
December  31,  1997,  the maximum  contingent  liability  under this program was
approximately $6.3 million.  CLARK has historically recorded profits on the sale
of repurchased machines.

Year 2000

         The Company is aware of the issues associated with the programming code
in  existing  computer  systems as the  millennium  approaches.  The "year 2000"
problem is pervasive and complex as virtually  every computer  operation will be
affected  in some way by the  rollover  of the two digit  year  value to 00. The
issue  is  whether  computer  systems  will  properly  recognize  date-sensitive
information  when the year changes to 2000.  Systems that do not recognize  such
information could generate erroneous data or cause a system to fail.

         The Company is utilizing  both  internal and  external  resources  with
respect  to its  year  2000  issues.  The  Company  is  also in the  process  of
installing  new  software  to  provide   improved   operational   and  financial
functionality.  This new software is year 2000  compliant.  The  installation is
expected to be  completed  in 1998 and is expected  to cost  approximately  $6.0
million.

New Accounting Pronouncements

         In June 1997, the Financial  Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting
Comprehensive  Income"  and SFAS No.  131,  "Disclosures  about  Segments  of an
Enterprise and Related Information".  In February 1998, the FASB issued SFAS No.
132, "Employers' Disclosures about Pensions and other Postretirement  Benefits".
These  statements  require  certain  modifications  and  additional  information
relating to financial  statement  disclosure of the components of  comprehensive
income,  operating  segment  information  and pensions and other post retirement
benefits.  These statements only impact the disclosure in financial  statements;
therefore,  management  does not expect that the adoption of these new standards
in 1998 will have a significant impact on the Company's  financial  condition or
results of operations.

         For additional information on contingencies and uncertainties, see Note
11 to the  Company's  consolidated  financial  statements  included  under "Item
8--Financial Statements and Supplementary Data."

                                       15

<PAGE>

Item 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Consolidated  Financial  Statements of the Company,  along with the
Report of  Independents  Accountants,  is included on pages F-1 through  F-25 of
this Form 10-K.

         Supplementary  data called for by this item is not presented,  as it is
not applicable to the registrant.


Item 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE

         None.

                                    PART III

Item 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table sets forth certain  information with respect to the
persons who are members of the Board of Directors  or executive  officers of the
Company.  Directors  serve for a term of one year or until their  successors are
elected  and  qualified;  officers  serve  at the  discretion  of the  Board  of
Directors.

        Name          Age                      Position
        ----          ---                      --------
Dr. Martin M. Dorio    52   President, Chief Executive Officer and Director
Dr. J. Frithjof Timm   55   Managing Director and President, CLARK Europe
Joseph F. Lingg        52   Vice  President,  Finance  and Human  Resources
                            and Treasurer
Kevin M. Reardon       53   Vice  President,  Sales  and  Marketing,  North
                            America
Michael J. Grossman    47   Vice President, General Counsel and Secretary
Robert J. O'Brien      48   Vice President, Manufacturing, North America
Thomas J. Snyder       52   Director
Dietcher               53   Director
Klingelnberg
Michael A. Delaney     43   Director
James A. Urry          43   Director

         Dr. Martin M. Dorio,  President,  Chief Executive Officer and Director.
Dr.  Dorio  joined the  Company in June 1995 as  President  and Chief  Executive
Officer.  From 1990 until he joined the  Company,  Dr.  Dorio  served in various
positions with Case  Corporation,  a manufacturer  of tractors and  construction
equipment,  including Vice President,  Corporate  Planning and Development.  Dr.
Dorio has over 20 years of  experience  in  manufacturing  and has served in key
management positions of FMC Corp. and General Electric Co.

         Dr. J. Frithjof Timm,  Managing  Director and President,  CLARK Europe.
Dr. Timm joined the Company in May 1995 as Managing  Director  and  President of
CLARK Europe.  From 1992 to 1995, he was President of Komatsu  Europe and, prior
to  that,  he was  Managing  Director  of Sales of the  Hydraulic  Mobile  Crane
Division of Krupp A.G.

         Joseph  F.  Lingg,  Vice  President,   Finance,   Human  Resources  and
Treasurer.  Mr.  Lingg  joined the  Company in January  1996 as Vice  President,
Finance and  Treasurer.  In 1995,  Mr. Lingg served as Vice  President and Chief
Financial Officer of RBC Company of America, a manufacturer of bearings, and for
more than five  years  prior  thereto  he  served  as Vice  President  and Chief
Financial  Officer of Mosler  Inc.,  a  manufacturer  and  servicer  of security
products.

         Kevin M. Reardon, Vice President,  Sales and Marketing,  North America.
Mr.  Reardon joined the Company in 1984 and has been Vice President of Sales and
Marketing,  North America since 1995. Previously, Mr. Reardon served as Director
of Marketing and National Sales Manager for the Company.

         Michael J. Grossman, Vice President, General Counsel and Secretary. Mr.
Grossman joined the Company in 1985 as Assistant General Counsel. Since 1991, he
has served as Vice  President,  General  Counsel and Assistant  Secretary of the
Company.

                                       15

<PAGE>

         Robert J. O'Brien,  Vice President,  Manufacturing,  North America. Mr.
O'Brien joined the Company in March of 1995, as Director of Manufacturing.  From
1980 until he joined the Company, he served in various key operations  positions
with Allied  Signal  Aerospace.  Mr.  O'Brien has over 20 years of experience in
manufacturing operations in the Aerospace industry.

         Thomas J.  Snyder,  Director.  Mr.  Snyder  has been  President,  Chief
Operating Officer and a director of Delco Remy  International,  Inc. since 1994.
From 1962 to 1994,  Mr. Snyder held several  executive  positions with the Delco
Remy Division of General Motors,  most recently as Product  Manager,  Heavy Duty
Systems. He is also a director of St. John's Health Systems.

         Dietcher  Klingelnberg,  Director.  Mr.  Klingelnberg  served  as Chief
Executive  Officer of  International  Knife & Saw,  Inc.  until March  1996.  In
addition,  he served as Chairman of the Board and Chief Executive Officer of IKS
Corporation  from 1979  until  November  1996.  Mr.  Klingelnberg  is  currently
Managing Director of Klingelnberg  Beteillgungs-GmbH and is a director of Honsel
AG, IKS Corporation,  the Alfred H. Schuette Company, and Eickhoff,  Bochum, and
Oerlikon Geartec AG, Zuerich.

         Michael A. Delaney,  Director. Mr. Delaney has been a Managing Director
of CVC since 1989.  From 1986 through  1989,  he was Vice  President of Citicorp
Mergers and Acquisitions.  Mr. Delaney is a director of Aetna Industries,  Inc.,
AmeriSource  Health  Corporation,  MSX  International,  CORT  Business  Services
Corporation,  Delco  Remy  International,   Inc.,  Enterprise  Media  Inc.,  GVC
Holdings,  IKS  Corporation,  JAC  Holdings,  Palomar  Technologies,   Inc.,  SC
Processing, Inc., and Triumph Holdings, Inc.

         James A. Urry,  Director.  Mr. Urry has been with Citibank,  N.A. since
1981,  serving as a Vice  President  since 1986. He has been a Vice President of
CVC since  1989.  He is a  director  of  AmeriSource  Health  Corporation,  CORT
Business  Services  Corporation,  Hancor Holding  Corporation,  IKS Corporation,
Airxcel, Inc., Polamar Technologies, Inc. and York International Corporation.

Director Compensation and Arrangements

         The  directors  of the  Company do not receive  compensation  for their
services as directors. Members of the Board of Directors are elected pursuant to
certain voting agreements among Holdings and its  stockholders.  See "Item 12 --
Security   Ownership   of  Certain   Beneficial   Owners   and   Management--The
Stockholders' Agreement."

Item 11 -- EXECUTIVE COMPENSATION

         The  compensation  of  executive   officers  of  the  Company  will  be
determined  by the Board of  Directors  of the  Company.  The Company  adopted a
401(k) retirement plan in 1997. See "--401(k) Plan".

         The  following  table sets forth  certain  information  concerning  the
compensation  received by the Chief  Executive  Officer and the four most highly
compensated officers of the Company for services rendered in 1997.

                                       16
<PAGE>

<TABLE>
<CAPTION>


                                            Summary Compensation Table


                                                                                  Long Term Compensation
                                                                                  ----------------------

                                                Annual Compensation                       Awards
                                                -------------------                       ------

                                                                     Other       Restricted         Stock
                                                                    Annual          Stock          Options       All Other
                                        Salary         Bonus     Compensation      Awards        (# Shares)   Compensation(1)
                                        ------         -----     ------------      ------        ----------   ---------------

<S>                                    <C>          <C>               <C>             <C>           <C>        <C>
  
Dr. Martin M. Dorio.................   $293,750     188,745           --              --            --         $       11,490
President and Chief Executive
Officer

Dr. J. Frithjof Timm................    193,195      17,388           --              --            --                 31,719
President, CLARK Europe (2)

Joseph F Lingg......................    124,375      48,367           --              --            --                  6,905
Vice President of Finance and
Human Resources

Kevin M. Reardon....................    118,067      33,132           --              --            --                  4,148
Vice President of Sales and
Marketing

Michael J. Grossman                     125,000      49,335           --              --            --                  5,639
Vice President and General Counsel

</TABLE>
-----------------

(1) Includes  Company  401(k)   contributions  and  group  term  life  insurance
    premiums,  respectively,  as  follow:  Dr.  Dorio,  $8,501 and  $2,989;  Mr.
    Reardon, $1,171 and $2,977; Mr. Grossman,  $3,868 and $1,772; and Mr. Lingg,
    $3,866 and $3,039. Includes $31,719 for pension and disability for Dr. Timm.

(2) Dr.  Timm's  salary,  bonus,  and other  compensation  are  calculated  from
    Deutsche Marks using a conversion rate of 1.734 DM/$.


Employment Agreements

         In 1996,  Holdings  entered a three-year  employment  contract with Dr.
Martin M. Dorio  pursuant to which Dr.  Dorio is employed as the  President  and
Chief Executive Officer of Holdings and the Company.  The agreement provides for
an annual base salary of $225,000,  which is subject to annual merit  increases,
and an annual  performance bonus. The Company has agreed that, in the event that
holdings  is unable to pay Dr.  Dorio any  amounts  due to him with  respect  to
annual  bonuses,  the Company will pay such amounts.  Since  November  1996, the
Company has paid Dr. Dorio's compensation.  In addition,  the agreement provides
for the receipt by Dr.  Dorio of standard  company  benefits.  The  agreement is
terminable by Holdings  with or without  cause.  In the event,  the agreement is
terminated  without  cause or as a result of the total  disability of Dr. Dorio,
Dr.  Dorio will be  entitled  to continue to receive his base salary and certain
other benefits for specified  periods.  Following any termination of Dr. Dorio's
employment,  he will be  subject  to a  non-competition  covenant  for up to two
years.

401(k) Plan

         In 1997,  the  Company  adopted  a  qualified  401(k)-retirement  plan.
Subject  to  certain  statutory  limitations,  eligible  employees  are  able to
contribute a percentage  of their  compensation  to the plan on a pre-tax  basis
("elective deferrals").  For 1997, the maximum amount of elective deferrals that
could be made by any  employee was $9,500.  Employees  are fully vested in their
elective  deferrals  at all  times.  Generally,  employees  may  not  receive  a
distribution  of  their  account  balances  prior to  their  death,  disability,
termination of employment or retirement,  and their account  balances  cannot be
assigned or alienated.

Compensation Committee Interlocks and Insider Participation

         Although  the Company has no  compensation  committee,  each of Messrs.
Snyder,  Klingelnberg,  Delaney and Urry  participated in  deliberations  of the
Board of Directors concerning executive compensation.

                                       17
<PAGE>

Item 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         All of the outstanding  capital stock of the Company is currently owned
by Holdings.  The following table sets forth certain information with respect to
the beneficial  ownership of the Holdings  Preferred  Stock and Holdings  Common
Stock by (i) each person or entity who owns five percent or more  thereof,  (ii)
each  director of the Company who is a  stockholder,  (iii) the Chief  Executive
Officer of the Company and the other  executive  officers  named in the "Summary
Compensation  Table"  above who are  stockholders,  and (iv) the  directors  and
officers of the Company as a group. Unless otherwise  specified,  all shares are
directly held.

<TABLE>
<CAPTION>

                                                                   Number and Percent of Shares

                                                      Holdings
                                                      Preferred          Holdings Class A       Holdings Class B
                                                        Stock                Stock(1)               Stock(2)
                                                        -----                --------               --------
                 Name of Beneficial Owner       Number     Percent      Number    Percent      Number      Percent
                 ------------------------       ------     -------      ------    -------      ------      -------
<S>                                           <C>           <C>     <C>             <C>    <C>              <C> 

              Citicorp Venture Capital Ltd.   12,205.4      71.89%  102,671.40      37.5%  549,394.14       75.6%%
                 399 Park Avenue
                 New York, New York  10043
              Dr. Martin M. Dorio                404.8        2.4%    55,180.7      20.2%       --           --
                 172 Trade Street
                 Lexington, Kentucky  40511
              Dr. J. Frithjof Timm               130.1        0.8%    19,879.5       7.3%       --          --
                 172 Trade Street
                 Lexington, Kentucky  40511
              Kevin M. Reardon                    37.1        0.2%     5,391.6       2.0%       --          --
              Michael J. Grossman                 68.4        0.4%     6,566.3       2.4%       --          --
              Joseph F. Lingg                     40.5        0.2%     5,518.1       2.0%       --          --
              Thomas J. Snyder                     --         --       5,000.0       1.8%       --          --
              Dietcher Klingelnberg                --         --          42.0      0.02%    8,943.5          1.2%
              Michael A. Delaney                 101.5        0.6%       855.0       0.3%    4,536.3          0.6%
              James A. Urry                      101.5        0.6%       855.0       0.3%    4,536.3          0.6%
              All directors and executive 
                 officers as a group
                 (10 persons)                    734.9        4.3%   106,396.6      38.9%   18,016.1         1.2%
----------

</TABLE>

(1) Does not include shares of Holdings Class A Stock  issueable upon conversion
    of Holdings  Class B Stock.  See  "--Holdings  Common  Stock."  Assuming the
    conversion  of all of a  holder's  shares  of  Holdings  Class B Stock  into
    Holdings  Class A Stock,  but no such  conversion  by any  other  holder  of
    Holdings  Class B Stock,  the number of shares and the  percentage  of total
    Holdings  Class A Stock held by the  converting  holder would be as follows:
    for CVC, 652,065.5 and 79.2%; for Dietcher  Klingelnberg,  8,985.5 and 3.2%;
    for Michael A.  Delaney,  5,391.3 and 1.9%;  for James A. Urry,  5,391.3 and
    1.9%; and for all directors and executive officers as a group, 124,412.7 and
    42.7%.

(2) Does not include shares of Holdings  Class B Stock issuable upon  conversion
    of Holdings  Class A Stock.  See  "--Holdings  Common  Stock."  Assuming the
    conversion  of all of a  holder's  shares  of  Holdings  Class A Stock  into
    Holdings  Class B Stock,  but no such  conversion  by any  other  holder  of
    Holdings  Class A Stock,  the number of shares and the  percentage  of total
    Holdings  Class B Stock held by the  converting  holder would be as follows:
    for CVC,  652,065.54 and 78.6%; for Dr. Martin M. Dorio,  55,180.7 and 7.1%;
    for Dr. J. Frithjof Timm,  19,879.5 and 2.7%; for Kevin M. Reardon,  5,391.6
    and 0.7%;  for Michael J.  Grossman,  6,566.3 and 0.9%; for Joseph F. Lingg,
    5,518.1  and 0.7%;  for  Thomas J.  Snyder,  5,000  and 0.7%;  for  Dietcher
    Klingelnberg,  8,985.5 and 1.2%;  for Michael A. Delaney,  5,391.3 and 0.7%;
    and for James A. Urry, 5,391.3 and 0.7%; and for all directors and executive
    officers as a group, 124,412.7 and 14.9%.


Holdings Common Stock

         The Certificate of Incorporation of Holdings provides that Holdings may
issue  2,500,000  shares of  Holdings  Common  Stock,  divided  into two classes
consisting  of  1,250,000  shares of  Holdings  Class A Stock and  1,250,000  of
Holdings  Class B Stock.  The holders of Holdings  Class A Stock are entitled to
one vote for each share held of record on all matters submitted to a vote of the
stockholders.  Except as required by law, the holders of Holdings  Class B Stock
have no voting rights.  Under the Certificate of  Incorporation  of Holdings,  a
holder of either  class of Holdings  Common  Stock may convert any or all of his
shares  into an equal  number of shares of the other  class of  Holdings  Common
Stock;  provided that in the case of a conversion  from Holdings  Class B Stock,
which is nonvoting,  into Holdings Class A Stock, which is voting, the holder of
shares to be converted would be permitted under applicable law to hold the total
number of shares of  Holdings  Class A stock  which  would be held after  giving
effect to the conversion.

                                       18

<PAGE>

The Stockholders' Agreement

         Pursuant to the Securities  Purchase and Holders Agreement entered into
among the stockholders of Holdings (the "Stockholders' Agreement"), the Board of
Directors  of Holdings  and the  Company  shall be composed at all times of five
directors as follows: the President of the Company, Dr. Martin M. Dorio (so long
as he continues to serve as President);  two individuals  designated by CVC; and
two  additional  directors  who shall not be  employees  of CVC but who shall be
designated  by CVC,  subject  to the right of  holders  of the  majority  of the
outstanding  shares of Holdings  Class A Stock to veto the election of either of
such additional directors.

         The  Stockholders'  Agreement  contains certain  provisions which, with
certain  exceptions,  restrict the ability of the stockholders from transferring
any Holdings  Common  Stock,  Holdings  Preferred  Stock or Holdings  Debentures
except pursuant to the terms of the Stockholders' Agreement. So long as Holdings
has not  consummated  a public  offering of Holdings  Common Stock  resulting in
aggregate  net proceeds of $30.0  million or more, if holders of at least 50% of
the Holdings Common Stock then outstanding approve the sale of the Company, each
stockholder  has agreed to consent to such sale and, if such sale  includes  the
sale of stock,  each  stockholder  has agreed to sell all of such  stockholder's
Holdings  Common  Stock on the terms and  conditions  approved  by  holders of a
majority of the Holdings  Common Stock then  outstanding.  In the event Holdings
proposes  to issue  and sell  (other  than in a public  offering  pursuant  to a
registration  statement)  any shares of Holdings  Common Stock  and/or  Holdings
Preferred  Stock or any securities  containing  options or rights to acquire any
shares  of  Holdings  Common  Stock  and/or  Holdings  Preferred  Stock  or  any
securities  convertible  into Holdings  Common Stock and/or  Holdings  Preferred
Stock to CVC or its corporate  affiliates,  Holdings must first offer to each of
the other shareholders a pro rata portion of such shares. Such preemptive rights
are not applicable in certain circumstances  including the issuance of shares of
Holdings  Common Stock and/or  Holdings  Preferred  Stock upon the conversion of
shares of one class of Holdings  Common Stock and/or  Holdings  Preferred  Stock
into shares of the other class or upon an initial public offering.

         The  Stockholders'  Agreement  also  provides  for  certain  additional
restrictions on transfer of shares by Management Investors,  including the right
of  Holdings  to  repurchase  shares  upon  termination  of  such  stockholder's
employment prior to 2002, at a formula price, and in certain  circumstances  the
grant of a right of first refusal in favor of Holdings in the event a Management
Investor elects to transfer shares of Holdings Common Stock.


Registration Rights Agreement

         In  connection  with  their  entry  into the  Stockholders'  Agreement,
Holdings,  CVC, Dr. Martin M. Dorio, Thomas J. Snyder and the other stockholders
of  Holdings  entered  into  a  Registration  Rights  Agreement  (the  "Holdings
Registration  Rights Agreement").  Pursuant to the Holdings  Registration Rights
Agreement,  upon the written request of CVC,  Holdings has agreed to (subject to
certain  exceptions)  prepare  and  file  a  registration   statement  with  the
Securities and Exchange Commission concerning the distribution of all or part of
the  shares  held by CVC and use its best  efforts  to cause  such  registration
statement to become  effective.  If at any time  Holdings  files a  registration
statement  for  the  Holdings  Common  Stock  pursuant  to a  request  by CVC or
otherwise  (other than a  registration  statement  on Form S-8,  Form S-4 or any
similar form, a registration statement filed in connection with a share exchange
or an offering  solely to  Holdings'  employees or existing  stockholders,  or a
registration statement registering a unit offering),  Holdings will use its best
efforts to allow the other parties to the Holdings Registration Rights Agreement
to have their  shares of  Holdings  Common  Stock (or a portion of their  shares
under certain circumstances)  included in such offering of Holdings Common Stock
if the  registration  form  proposed  to be used  may be used to  register  such
shares.   Registration   expenses  of  the  selling   stockholders  (other  than
underwriting  fees,  brokerage fees and transfer taxes  applicable to the shares
sold by such  stockholders  or the fees and expenses of any accountants or other
representatives retained by a selling stockholder) are to be paid by Holdings.

                                       19

<PAGE>

Item 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Service Agreement

         In connection with the Acquisition,  the Company entered into a service
agreement (the "Service  Agreement") with the  Predecessor's  Parent pursuant to
which the Company shares space in the Southaven  Facility with another  division
of the Predecessor's Parent. In addition, pursuant to such agreement the Company
hired  approximately  27 employees who are responsible for aftermarket  customer
support and administration.  The Company pays an aggregate annual fee under such
Service  Agreement of  approximately  $5.9 million (the "Base Fee"),  payable in
monthly  installments.  In addition to the Base Fee,  certain  provisions of the
Service  Agreement  may require  each of the  Predecessor's  Parent and CLARK to
share the  responsibility for additional costs and savings resulting from, among
other  things,  changes  or  increases  in  the  provision  of  services  or the
implementation  of certain cost savings.  The term of the agreement is for three
years.  Management  believes that the terms of the Service Agreement are no less
favorable  to the  Company  than  those  that  could  have  been  obtained  from
non-affiliated parties at the time the agreement was entered into.

Tax Sharing Agreement

         Holdings  and the Company will be included in the  consolidated  United
States federal income tax return of Holdings.  Holdings and the Company  entered
into a tax sharing agreement (the "Tax Sharing  Agreement")  whereby the Company
will pay Holdings  (or Holdings  will pay the Company) its pro rata share of the
total tax liability,  as set out in the Tax Sharing Agreement.  In the event the
Company is included in a joint, combined, consolidated or unitary state or local
income or franchise tax return with Holdings, the Company shall make payments to
Holdings,  and  Holdings  shall  make  payments  to  the  Company,  in a  manner
consistent with that described above for federal tax purposes.


License Agreement

         In connection with the Acquisition,  Holdings  acquired certain patents
and patent applications related to the Company's business from the Predecessor's
Parent.  Pursuant to a License Agreement dated as of November 27, 1996, Holdings
granted  to  the  Company  a  perpetual,   world-wide,  exclusive  royalty-free,
fully-paid-up  license to practice methods,  and to make, use, import, offer for
sale or sell any products, covered by such patents and patent applications.

Other

         At the time of the Acquisition, it was contemplated that certain shares
of capital stock of Holdings  would be issued to the members of  management.  In
furtherance  of that intent,  effective  as of as of January 31, 1997,  Holdings
repurchased  certain outstanding shares of Holdings Preferred Stock and Holdings
Class B Stock having an aggregate value of  approximately  $1.1 million from CVC
and,  simultaneously  therewith,  issued and sold shares of  Holdings  Preferred
Stock and  Holdings  Common Stock having an  equivalent  value to Dr.  Martin M.
Dorio,  and other members of management.  In connection  therewith,  the Company
loaned Dr. Dorio $200,000  toward the purchase price of the securities  acquired
by him.  Such loan is evidenced by a demand  promissory  note that does not bear
interest.  In addition,  effective as of February 20, 1997, Holdings repurchased
certain outstanding shares of Holdings Class A Stock, Holdings Class B Stock and
12% Junior  Subordinated  Notes (the  "Junior  Subordinated  Notes") of Holdings
having an aggregate  value of $250,000  from CVC and  simultaneously  therewith,
issued and sold shares of Holdings Class A Stock, Holdings Class B Stock and the
Junior Subordinated Notes having an equivalent value to Dietcher Klingelnberg.

                                       20

<PAGE>

                                     PART IV

Item 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1)   List of Financial Statements.

         Financial Data Schedule

         The following  Consolidated Financial Statements of the Company and the
Report  of  Independent  Accountants  set  forth  on  pages  F-1  through  F-25,
respectively,  are  incorporated  by reference into this item 14 of Form 10-K by
item 8 hereof:

         See Index to Consolidated Financial Statements on page F-1.

(a)(2)   Financial Statement Schedules.

         No financial  statement  schedules  have been filed herewith since they
are either not required,  are not  applicable,  or the required  information  is
shown in the consolidated financial statements or related notes.

(a)(3)   Exhibits.

Exhibit                             Description
No.
--- 

3.1    Certificate of Incorporation, as amended, of the Company (incorporated by
       reference to Exhibit 3.1 to the Company's  Registration Statement on Form
       S-4, Registration No. 333-18957)

3.2    By-laws of the Company  (incorporated  by reference to Exhibit 3.2 to the
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

4.1    Indenture  dated as of November  27, 1996  between the Company and United
       States Trust Company of New York, as Trustee  (incorporated  by reference
       to  Exhibit  4.1 to the  Company's  Registration  Statement  on Form S-4,
       Registration No. 333-18957)

4.2    Registration  Rights  Agreement  dated as of November  27, 1996 among the
       Company,  Jefferies  &  Company,  Inc.  and  Bear,  Stearns  &  Co.  Inc.
       (incorporated  by reference to Exhibit 4.2 to the Company's  Registration
       Statement on Form S-4, Registration No. 333-18957)

4.3    Form  of 10 3/4%  Senior  Notes  due  2006   (included  in  Exhibit  4.1)
       (incorporated  by reference to Exhibit 4.3 to the Company's  Registration
       Statement on Form S-4, Registration No. 333-18957)

10.1   Purchase Agreement dated November 22, 1996 among the Company, Jefferies &
       Company, Inc. and Bear, Stearns & Co. Inc.  (incorporated by reference to
       Exhibit  10.1  to the  Company's  Registration  Statement  on  Form  S-4,
       Registration No. 333-18957)

10.2   Loan and  Security  Agreement  dated  November  27,  1996 by and  between
       Congress Financial Corporation and the Company (incorporated by reference
       to Exhibit  10.2 to the  Company's  Registration  Statement  on Form S-4,
       Registration No. 333-18957)

10.3   Stock and Asset Purchase and Sale Agreement, dated as of November 9, 1996
       among the Terex  Corporation,  and  certain of its  subsidiaries  and the
       Company  (incorporated  by  reference  to Exhibit  10.3 to the  Company's
       Registration Statement on Form S-4, Registration No. 333-18957)

10.4   Service  Agreement  dated as of  November  27,  1996  between  the  Terex
       Corporation and the Company (incorporated by reference to Exhibit 10.4 to
       the  Company's  Registration  Statement  on Form  S-4,  Registration  No.
       333-18957)

10.5   Indemnity  as to Letters  of Credit,  Performance  Bonds,  Appeal  Bonds,
       Guaranties,  etc.  dated November 27, 1996 by the Company in favor of the
       Terex Corporation,  for itself and as successor to CMH Acquisition Corp.,
       CMH Acquisition  International Corp., CLARK Material Handling Company and
       CLARK Material Handling International, Inc. (incorporated by reference to
       Exhibit  10.5  to the  Company's  Registration  Statement  on  Form  S-4,
       Registration  No.  333-18957)  

10.6   Employment  Agreement dated as of November 27, 1996 between  Holdings and
       Dr.  Martin M. Dorio  (incorporated  by  reference to Exhibit 10.6 to the
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

                                       21
<PAGE>

10.7   Tax Sharing  Agreement made as of November 27, 1996 between  Holdings and
       the Company  (incorporated  by reference to Exhibit 10.7 to the Company's
       Registration Statement on Form S-4, Registration No. 333-18957)

10.8   Stock Purchase Agreement,  dated as of May 27, 1992, by and between CLARK
       Equipment Company and the Terex Corporation (incorporated by reference to
       Exhibit  10.8  to the  Company's  Registration  Statement  on  Form  S-4,
       Registration No. 333-18957)

10.9   First  Amendment to the Stock  Purchase  Agreement,  dated as of July 31,
       1992,  by and  between  CLARK  Equipment  Company  and Terex  Corporation
       (incorporated by reference to Exhibit 10.9 to the Company's  Registration
       Statement on Form S-4, Registration No. 333-18957)

10.10  Trademark Assignment Agreement, dated as of July 31, 1992, by and between
       CLARK Equipment Company and CLARK Material Handling Company (incorporated
       by reference to Exhibit 10.10 to the Company's  Registration Statement on
       Form S-4, Registration No. 333-18957)

10.11  Second Amended and Restated General Operating  Agreement,  dated November
       29,  1990,  by and  between  CLARK  Material  Handling  Company and Chase
       Manhattan  Leasing  Company,  Inc.  (incorporated by reference to Exhibit
       10.11 to the Company's  Registration  Statement on Form S-4, Registration
       No. 333-18957)

10.12  Second  Amendment to the Second  Amended and Restated  General  Operating
       Agreement,  dated April 15, 1994,  by and among CLARK  Material  Handling
       Company,  Drexel  dated  August 1, 1994,  by and between  CLARK  Material
       Handling Company and CLARK Credit Corporation  (incorporated by reference
       to Exhibit  10.13 to the  Company's  Registration  Statement on Form S-4,
       Registration No. 333-18957)

10.14  Assignment of Second Amended and Restated  General  Operating  Agreement,
       dated March 22, 1995, by and between  CLARK  Material  Handling  Company,
       CLARK Credit  Corporation,  f/k/a Chase Manhattan  Leasing  Company,  and
       Associates Commercial  Corporation  (incorporated by reference to Exhibit
       10.14 to the Company's  Registration  Statement on Form S-4, Registration
       No. 333-18957)

10.15  Master  Software  License  and  Service  Agreement,  dated May 17,  1996,
       between CLARK Material Handling Company and SDRC Operations (incorporated
       by reference to Exhibit 10.15 to the Company's  Registration Statement on
       Form S-4, Registration No. 333-18957)

10.16  Letter Agreement, dated October 26, 1995, between CLARK Material Handling
       Company,  Manufacturers  Distribution  Services,  Inc.  and Maine  Rubber
       International   (incorporated  by  reference  to  Exhibit  10.16  to  the
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

10.17  MCI  Services  Agreement,  effective  as of July  1,  1995,  between  MCI
       Telecommunications   Corporation  and  CLARK  Material  Handling  Company
       (incorporated by reference to Exhibit 10.17 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957)

10.18  Agreement  for Systems  Operations  Services,  dated as of March 2, 1992,
       between CLARK Material Handling Company and Integrated  Systems Solutions
       Corporation,  as amended by  Amendments  #1 through #5  (incorporated  by
       reference to Exhibit  10.18 to the  Company's  Registration  Statement on
       Form S-4, Registration No. 333-18957)

10.19  Supply  Agreement,  dated  December  14,  1994,  between  CLARK  Material
       Handling  Company  and  Funk  Manufacturing   Company   (incorporated  by
       reference to Exhibit  10.19 to the  Company's  Registration  Statement on
       Form S-4, Registration No. 333-18957)

10.20  Supply  Agreement,  dated July 1, 1995,  between CLARK Material  Handling
       Company and Funk  Manufacturing  Company  (incorporated  by  reference to
       Exhibit  10.20  to the  Company's  Registration  Statement  on Form  S-4,
       Registration No. 333-18957)

10.21  Agreement,  dated June 1,  1983,  between  CLARK  Equipment  Company  and
       Mitsubishi Corporation,  Mitsubishi Heavy Industries, Ltd. and Mitsubishi
       Motors  Corporation,  as amended  (incorporated  by  reference to Exhibit
       10.24 to the Company's  Registration  Statement on Form S-4, Registration
       No. 333-18957)

10.22  Master Contract for Purchase and Sale, dated July 17, 1995, between CLARK
       Material  Handling  Company  and Custom  Tool and  Manufacturing  Company
       (incorporated by reference to Exhibit 10.25 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957)

10.23  Supply  Agreement,  dated  December  20,  1991,  between  CLARK  Material
       Handling Company and Dixson,  Inc.  (incorporated by reference to Exhibit
       10.26 to the Company's  Registration  Statement on Form S-4, Registration
       No. 333-18957)

                                       22
<PAGE>

10.24  Lease Agreement,  dated as of April 15, 1987, between Vergil D. Kelly and
       Kenny  Angelucci  and CLARK  Equipment  Company with respect to 172 Trade
       Street,  Lexington,  Kentucky,  as amended by Amendment #1 to Lease dated
       April  15,  1987  (incorporated  by  reference  to  Exhibit  10.27 to the
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

10.25  Standard Form Dealer Sales  Agreements, between CLARK  Material  Handling
       Company and  domestic  dealer  entities  (incorporated  by  reference  to
       Exhibit  10.28  to the  Company's  Registration  Statement  on Form  S-4,
       Registration No. 333-18957)

10.26  Agreement,  dated as of September 12, 1995, by and between CLARK Material
       Handling   Company  and  Nissan  Forklift   Corporation,   North  America
       (incorporated by reference to Exhibit 10.29 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957)

10.27  License  Agreement,  dated as of November 27, 1996,  between Holdings and
       the Company  (incorporated by reference to Exhibit 10.30 to the Company's
       Registration Statement on Form S-4, Registration No. 333-18957)

10.28  Asset  Purchase  Agreement,  dated as of November 6, 1997,  between Clark
       Material Handling of Canada Ltd. and Blue Giant Limited.

10.29  Asset  Purchase  Agreement,  dated as of October 31,  1997,  between Blue
       Giant Corporation and Blue Giant USA Corporation.

21.1   Subsidiaries of the Company

27     Financial Data Schedule

(b)    Reports on Form 8-K.

         On  October  31,  1997,  the  Company  filed a Form 8-K to  report  its
acquisition of Blue Giant USA  Corporation  and Blue Giant Canada Limited in two
separate purchase business combinations effective November 1, 1997.

                                       23

<PAGE>

SIGNATURES


         Pursuant to the  requirements  of Section 13 of 15(d) of the Securities
Exchange Act of 1934, as amended,  the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.


                                 CLARK Material Handling Company

                                 BY: /s/ Dr. Martin M. Dorio
                                 Dr. Martin M. Dorio
                                 President and CEO
                                 March 31, 1998

         Pursuant to the requirements of the securities exchange act of 1934, as
amended this report has been signed below by the following  persons on behalf of
the registrant and in the capacities indicated on March 31, 1998.
<TABLE>

<S>                                 <C>    

 /s/  Martin M. Dorio               President, Chief Executive Officer and Director
----------------------------        (Principal Executive Officer)
      Martin M. Dorio               


 /s/  Joseph F. Lingg               Vice President, Finance, Human Resources and Treasurer
----------------------------        (Principal Financial and Accounting Officer)
      Joseph F. Lingg               


 /s/ James A. Urry                  Director
----------------------------
     James A. Urry


 /s/ Thomas J. Snyder               Director
----------------------------
     Thomas J. Snyder


 /s/ Michael A. Delaney             Director
----------------------------
     Michael A. Delaney


 /s/ Dietcher Klingelnberg          Director
----------------------------
     Dietcher Klingelnberg

</TABLE>

                                       24

<PAGE>

          SUPPLEMENTAL  INFORMATION TO BE FURNISHED WITH REPORTS FILED
          PURSUANT TO SECTION  15(d) OF THE ACT BY  REGISTRANTS  WHICH
          HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE
          ACT.


         The registrant has not sent the following to security holders:  (i) any
annual report to security holders covering the registrant's last fiscal year; or
(ii) any proxy statement,  form of proxy or other proxy soliciting material with
respect to any annual or other meeting of security holders.

                                  25

<PAGE>

                    CLARK MATERIAL HANDLING COMPANY
                      AND PREDECESSOR BUSINESSES


              INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                   AND FINANCIAL STATEMENT SCHEDULES


Consolidated  financial statements as of December 31, 1997 and December 31, 1996
and for the year ended December 31,1997, the one month period ended December 31,
1996,  the  eleven  month  period  ended  November  26,  1996 and the year ended
December 31, 1995.

                                                                     Page

Report of independent accountants                                    F-2
Consolidated balance sheet                                           F-3
Consolidated statement of operations                                 F-4
Consolidated statement of stockholder's equity                       F-5
Consolidated statement of cash flows                                 F-6
Notes to consolidated financial statements                           F-7

Schedules  for which  provision  is made in the  applicable  regulations  of the
Securities   and  Exchange   Commission  are  not  required  under  the  related
instructions  or the  information  is included in the notes to the  consolidated
financial statements, or are not applicable, and therefore have been omitted.

                                       F-1

<PAGE>

                   REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and
Stockholder of CLARK Material
Handling Company


In our opinion, the consolidated balance sheet and the related consolidated
statements of operations, of stockholder's equity and of cash flows present
fairly, in all material respects, the consolidated financial position of CLARK
Material Handling Company and its predecessor businesses at December 31, 1997
and December 31, 1996 and the results of their operations and cash flows for the
year ended December 31, 1997, the one month period ended December 31, 1996, the
eleven month period ended November 26, 1996 and the year ended December 31,
1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of management; our responsibility is
to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.



Price Waterhouse LLP
Cincinnati, Ohio
February 24, 1998

                                       F-2

<PAGE>

CLARK Material Handling Company

Consolidated Balance Sheet (in thousands, except share amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                   December 31,       December 31,
                                                                       1996               1997
                                                                       ----               ----

<S>                                                                <C>             <C>
Current assets
  Cash and cash equivalents                                        $   16,554      $     6,334
  Cash securing letters of credit                                       1,092              320
  Trade receivables (less allowance of $2,215 at
    December 31, 1996 and $1,906 at December 31, 1997)                 38,154           47,018
  Net inventories                                                      60,441           70,784
  Other current assets                                                  6,255            7,281
                                                                   ----------      -----------
       Total current assets                                           122,496          131,737

Long term assets
  Property, plant and equipment-net                                    51,014           47,836
  Goodwill, net of accumulated amortization of
  $231 at December 31, 1996 and $3,081 at
  December 31, 1997                                                   109,311          114,887
  Other assets                                                         18,486           18,794
                                                                   ----------      -----------
       Total assets                                                 $ 301,307      $   313,254
                                                                   ==========      ===========

Current liabilities
  Notes payable                                                     $   3,246      $     3,184
  Current portion of capital lease obligations                          2,407            2,732
  Trade accounts payable                                               53,562           62,002
  Accrued compensation and benefits                                     5,319            5,730
  Accrued warranties and product liability                             23,383           20,774
  Other current liabilities                                             9,489           10,728
                                                                   ----------      -----------
       Total current liabilities                                       97,406          105,150

Non-current liabilities
  Senior notes payable                                                130,000          130,000
  Capital lease obligations, less current portion                       3,600            3,864
  Accrued warranties and product liability                             30,826           38,497
  Other non-current liabilities                                        14,402           12,002
                                                                   ----------      -----------
       Total liabilities                                              276,234          289,513
                                                                   ----------      -----------
Commitments and contingencies (Note 11)                                     -                -

Stockholder's equity
  Common stock, par value $1 per share, 1,000
  shares authorized, issued and outstanding                                 1                1
  Paid-in-capital                                                      24,999           24,999
  Retained earnings                                                       535            8,406
  Cumulative translation adjustment                                     (462)          (9,665)
                                                                   ----------      -----------
       Total stockholder's equity                                      25,073           23,741
                                                                   ----------      -----------
       Total liabilities and stockholder's equity                   $ 301,307      $   313,254
                                                                   ==========      ===========

   The accompanying notes are an integral part of these financial statements.

                                       F-3
</TABLE>
<PAGE>


CLARK Material Handling Company
 and Predecessor Businesses
Consolidated Statement of Operations (in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                           Predecessor                       The Company
                                                           -----------                       -----------
                                                                       Eleven            One
                                                         Year           Months           Month          Year
                                                         Ended          Ended            Ended          Ended
                                                        December3l,   November26,      December3l,    December3l,
                                                          1995          1996             1996            1997
 
                                                       
<S>                                                     <C>           <C>             <C>             <C>   

Net sales                                               $ 528,759     $ 404,629    |  $  46,763       $ 489,294
Cost of goods sold                                        484,569       359,061    |     41,905         431,127
                                                        ---------     ---------    |  ---------       ---------
      Gross profit                                         44,190        45,568    |      4,858          58,167
                                                                                   |
Engineering, selling and administrative expenses           30,649        26,613    |      2,923          37,133
                                                                                   |
Parent company management fees                              6,996         5,672    |          -               -
                                                                                   |
Severance and exit charges                                  3,478             -    |          -               -
                                                        ---------     ---------    |  ---------       ---------
      Income from operations                                3,067        13,283    |      1,935          21,034
                                                                                   |
Other income (expense):                                                            |
  Interest expense                                           (790)         (370)   |    (1,393)        (15,086)
  Allocated interest expense from parent                                           |
  company                                                 (16,145)      (14,656)   |          -               -
  Interest income                                             602           220    |         25             809
  Amortization interest expense from parent                                        |
  company                                                    (530)         (349)   |         -                -
  Property impairment charge                               (2,500)            -    |         -                -
  Other income (expense) - net                               (975)         (223)   |       (32)           1,598
                                                        ---------     ---------    |  ---------       ---------
      Income (loss) before income taxes and                                        |
      extraordinary items                                 (17,271)       (2,095)   |        535           8,355
                                                                                   |
Provision (benefit) for income taxes                         (148)            -    |          -             484
                                                        ---------     ---------    |  ---------       ---------
  Income (loss) before extraordinary items                (17,419)       (2,095)   |        535           7,871
                                                                                   |
Extraordinary loss on retirement of allocated                                      |
debt                                                       (1,347)            -    |         -                -
                                                        ---------     ---------    |  ---------       ---------
Net income (loss)                                      $  (18,766)     $ (2,095)   |        535         $ 7,871
                                                       ==========     =========       =========       =========
</TABLE>


 The accompanying notes are an integral part of these financial statements.

                                       F-4

<PAGE>

<TABLE>
<CAPTION>


CLARK Material Handling Company
 and Predecessor Businesses
Consolidated Statement of Stockholder's Equity (in thousands)
--------------------------------------------------------------------------------

                                                                                                          Foreign
                                                                                           Retained       currency
                                                         Common          Paid-in           earnings      translation
                                                          stock          capital           (deficit)     adoustments
                                                          -----          -------           ---------     -----------
<S>                                                         <C>            <C>            <C>            <C>
PREDECESSOR

Balance at December 31, 1994                                                              $ (76,107)     $   (3,915)
   Net loss for the year ended December 31, 1995                                            (18,766)
      Translation adjustment                                                                      -           2,066
                                                                                          ---------      ----------
Balance at December 31, 1995                                                                (94,873)         (1,849)

   Net loss for the eleven months ended
         November 26, 1996                                                                   (2,095)
      Translation adjustment                                                                      -          (2,546)
                                                                                          ---------      ----------

Balance at November 26, 1996                                                              $ (96,968)     $   (4,395)
                                                                                          =========      ==========

THE COMPANY

     Issuance of common stocks                          $      1      $  24,999
     Net income for the month ended
         December 31, 1996                                     -              -                535               -
     Translation adjustment                                    -              -                  -            (462)
                                                        --------      ---------           ---------      ----------
 Balance at December 31, 1996                                  1         24,999                535            (462)

     Net income for the year ended
       December 31, 1997                                       -             -               7,871
     Translation adjustment                                    -             -                   -       $  (9,203)
                                                        --------      ---------           ---------      ----------
 Balance at December 31, 1997                           $      1      $  24,999           $  8,406       $  (9,665)
                                                        ========      =========           ========       ==========
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                       F-5

<PAGE>

CLARK Material Handling Company
and Predecessor Businesses
Consolidated Statement of Cash Flows (in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                      Predecessor                          The Company
                                                            ------------------------------       ------------------------------
                                                                               Eleven                One
                                                                Year           Months               Month            Year
                                                                Ended          Ended                Ended           Ended

                                                            December 3l,      November 26,        December 3l,    December 3l,
                                                               1995             1996                 1996            1997
                                                               ----             ----                 ----            ----
<S>                                                         <C>               <C>                 <C>             <C>       
Operating activities:                                                                        |
  Net income (loss)                                         $  (18,766)       $   (2,095)    |    $      535      $   7,871
  Adjustments to reconcile net income (loss)                                                 |
  to cash provided by operating activities:                                                  |
    Depreciation                                                11,534             9,312     |           778          1,900
    Amortization                                                 1,310             1,099     |           322          3,350
    Extraordinary loss on retirement of allocated debt           1,347                 -     |             -              -
    Loss on sale of property, plant and equipment                  183                31     |            70             24 
    Property impairment charge                                   2,500                 -     |
    Changes in operating assets and liabilities excluding                                    |
    business combinations:                                                                   |
      Restricted cash                                             (516)             (220)    |          (136)           638
      Trade receivables                                           (240)           (2,406)    |         2,800         (8,732)
      Net inventories                                           (2,685)           (2,696)    |         9,801         (7,015)
      Trade accounts payable                                    (2,084)               61     |       (11,265)         7,866
      Accrued compensation and benefits                            (73)              409     |          (609)          (156)
      Accrued warranties and product liability                   1,126            (2,248)    |           237          3,581
      Due to parent company                                     19,187             8,720     |             -              -
      Other assets and liabilities, net                         (5,645)           (5,876)    |           223         (5,211)
                                                             ---------         ---------     |    ----------      ---------
       Net cash provided by operating activities                 7,178             4,091     |         2,756         11,109
                                                             ---------         ---------     |    ----------      ---------
 Investing activities:                                                                       |
    Business combinations                                            -                 -     |             -        (14,646)
    Capital expenditures                                        (5,290)           (3,208)    |          (317)        (6,340)
    Proceeds from sale of assets                                   534               139     |             -              -
                                                             ---------         ---------     |    ----------      ---------
        Net cash used in investing activities                   (4,756)           (3,069)    |          (317)       (20,986)
                                                             ---------         ---------     |    ----------      ---------
 Financing activities:                                                                       |
    Issuance of current notes payable                                -                -      |             -          1,182
    Repayment of current notes payable                               -                -      |             -         (1,020)
    Repayment of allocated debt                                (51,754)               -      |             -              -
    Proceeds from allocated debt                                51,220              105      |             -              -
    Other,net                                                   (1,607)           1,376      |           293            147
                                                             ---------        ---------      |    ----------      ---------
        Net cash provided by (used in) financing activities     (2,141)           1,481      |           293            309
                                                             ---------        ---------      |    ----------      ---------
 Effect of exchange rate changes on cash and                                                 |
 cash equivalents                                                 (976)          (1,262)     |          (306)          (652)
                                                             ---------        ---------      |    ----------      ---------
                                                                                             |
 Net increase (decrease) in cash and cash equivalents             (695)           1,241      |         2,426        (10,220)
 Cash and cash equivalents at beginning of period                1,514              819      |        14,128         16,554
                                                            ----------        ---------      |    ----------      ---------
 Cash and cash equivalents at end of period                 $      819        $   2,060      |    $   16,554      $   6,334
                                                            ==========        =========      |    ==========      =========
                                                                                             |
  Supplemental disclosures                                                                   |
     Cash paid for interest                                        793        $     337      |    $       86      $  14,465
     Income taxes paid                                                               17      |    $        -      $       -

</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       F-6

<PAGE>


CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

NOTE 1 - REPORTING ENTITY AND BASIS OF PRESENTATION

CLARK Material Handling Company (the "Company") is a wholly-owned subsidiary of
CMH Holdings Corporation ("Holdings"). Prior to November 27, 1996, Holdings had
no previous business operations and was formed for the purpose of acquiring the
Company and its subsidiaries from Terex Corporation ("Terex" or the "Parent
Company") in a purchase business combination. That acquisition was consummated
on November 27, 1996. See Note 3 for information regarding the acquisition.

Prior to the acquisition, the Company's predecessor businesses ("Predecessor")
operated as wholly-owned subsidiaries of the Parent Company. Reference to the
Company relates to the period subsequent to November 26, 1996, while reference
to the Predecessor relates to operations on or prior to November 26, 1996. The
Parent Company acquired the Predecessor in 1992 in a purchase business
combination and Parent Company's basis, including its acquisition debt and
goodwill associated with the 1992 acquisition, was "pushed down" to the
Predecessor's financial statements.

The Predecessor's financial statements include allocations of Parent Company
acquisition debt and related interest expense. Management fees, which include
corporate overhead costs (including legal, treasury and other shared services),
have been allocated to the Predecessor based generally on the percentage of
Predecessor revenues to the Parent Company's consolidated revenues. Interest has
been charged on the management fee allocated and the due to Parent Company
balance at a rate of 13% compounded monthly.

The Company and the Predecessor operate in one industry segment,  that being the
design,  manufacture,  marketing  and  worldwide  distribution  and  support  of
internal  combustion  and  electric  lift trucks,  electric  walkies and related
components and replacement  parts.  Geographic  segment  information is shown in
Note 13.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation. The Company's financial statements include the
accounts of the Company and its subsidiaries, including CLARK Material Handling
GmbH, CLARK Forklift Korea, CLARK Material Handling of Brazil, HLT, Inc. ("HLT")
and Blue Giant Canada Limited and Blue Giant USA Corporation ("Blue Giant"). HLT
and Blue Giant were acquired in 1997-see Note 4. The Predecessor's financial
statements include the U.S, German, Brazilian and Korean material handling
operations of the Parent Company prior to their acquisition on November 27,
1996, on a combined basis. All material intercompany balances, transactions and
profits have been eliminated.

Cash and cash equivalents. Cash equivalents consist of highly liquid investments
with original maturities of three months or less. The carrying amount of cash
and cash equivalents approximates their fair value.

                                 F-7

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

Cash securing letters of credit. The Company has certain cash and cash
equivalents that are not fully available for use in operations. Certain
international operations collateralize letters of credit and performance bonds
with cash deposits.

Inventories. Inventories are stated at the lower of cost or market value. The
Company determines cost on the first-in, first-out ("FIFO") method for all
inventories. The Predecessor determined cost using the last-in, first-out
("LIFO") method for U.S. inventories and by the FIFO method for inventories of
international operations.

Goodwill. Goodwill represents the difference between the total purchase price
and the fair value of assets and liabilities (tangible and intangible) acquired
at the date of acquisition. Goodwill related to the Company is being amortized
on the straight-line method over forty years. The Company reviews the carrying
value of goodwill for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Measurement of any
impairment would include a comparison of discounted estimated future operating
cash flows anticipated to be generated during the remaining amortization period
of the goodwill to the net carrying value of goodwill.

Debt issuance costs. Debt issuance costs of the Company have been capitalized
and are being amortized on the straight-line method over the term of the related
debt. Debt issuance costs are included in other assets and totaled $6,625 and
$5,599 at December 31, 1997 and 1996, respectively. Amortization of these costs
totaled $625 and $47 for the year ended December 31, 1997 and for the one month
ended December 31, 1996, respectively.

Property, plant and equipment. Property, plant and equipment are stated at cost.
Expenditures for major renewals and improvements are capitalized while
expenditures for maintenance and repairs not expected to extend the life of an
asset beyond its normal useful life are charged to expense when incurred.
Depreciation is determined for financial reporting purposes using the
straight-line method over the estimated useful asset lives, generally 20 to 35
years for buildings, eight to twelve years for machinery and equipment and two
to eight years for other assets.

Revenue recognition. Revenue and costs are generally recorded when products are
shipped and invoiced to customers. Certain new units may be invoiced prior to
the time customers take physical possession. Revenue is recognized in such cases
only when the customer has a fixed commitment to purchase the units, the units
have been completed, tested and made available to the customer for pickup or
delivery, and the customer has requested that the units be held for pickup or
delivery at a time specified by the customer in the sales documents. In such
cases, the units are invoiced under the customary billing terms, title to the
units and risks of ownership pass to the customer upon invoicing, the units are
segregated from inventories and identified as belonging to the customer and
there are no further obligations under the order.

                                      F-8

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

Accrued warranties and product liability. Accruals for potential warranty and
product liability claims are recorded based on past claims experience. Warranty
costs are accrued at the time revenue is recognized. Self-insurance accruals are
provided for estimated product liability experience on known claims and for
claims anticipated to have been incurred which have not yet been reported.
Product liability accruals are presented on a gross settlement basis.

Foreign currency translation. Assets and liabilities of international operations
are translated at year-end exchange rates. Income and expenses are translated at
average exchange rates prevailing during the year. Foreign operations utilize
the local currency as the functional currency; translation adjustments are
accumulated in the cumulative translation adjustment account in equity. Gains or
losses resulting from foreign currency transactions are included in other income
(expense) and totaled $1,536, ($149), ($1,055) and ($1,232) for the year ended
December 31, 1997, the one month ended December 31, 1996, the eleven months
ended November 26, 1996 and for the year ended December 31, 1995, respectively.

Income taxes. Income taxes are provided using the asset and liability method
required by Statement of Financial Accounting Standards ("SFAS") No. 109.
Pursuant to a tax sharing agreement with Holdings, the Company is included in
the consolidated federal return of Holdings. The tax sharing arrangement does
not differ materially from that which would occur on a separate entity basis.
The Predecessor provided for income taxes on a separate entity basis.

Use of estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

Reclassifications. Certain reclassifications of prior year amounts have been
made to conform with the current year presentation.

                                       F-9

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

NOTE 3 - ACQUISITION

On November 27, 1996, Holdings acquired the Company and the Company's
subsidiaries in a business combination accounted for as a purchase. The
aggregate purchase price for the acquisition was $139,500, which was subject to
certain immaterial post-closing adjustments, and was financed through a $25,000
equity investment by Holdings in the common stock of the Company and the
issuance of $130,000 in Senior Notes due 2006 by the Company. The purchase price
was allocated to the estimated fair values of the Company's tangible and
intangible net assets with the remainder allocated to goodwill. The excess of
purchase price over the net assets acquired of $116,942 is being amortized on a
straight-line basis over forty years.

The operating results of the Company are included in the consolidated results of
operations since November 27, 1996. The following unaudited pro forma summary
presents the consolidated results of operations as though Holdings completed the
acquisition on January 1 of each period presented.

                                        Year ended December 31, 
                                        ----------------------- 
                                           1995         1996
                                           ----         ----

     Net sales                          $ 528,759    $ 451,392
                                        ==========   =========
     Income from operations             $   5,894    $  16,976
                                        ==========   =========
     Net income (loss)                  $ (12,452)   $   1,881
                                        ==========   =========


NOTE 4 - BUSINESS COMBINATIONS

Blue Giant

On November 7, 1997, the Company closed its acquisitions of substantially all of
the assets and certain liabilities of Blue Giant USA Corporation ("BGU") and
Blue Giant Canada Limited ("BGC") (collectively, "Blue Giant") in two separate
purchase business combinations effective November 1, 1997. Although separate
legal entities, BGU and BGC were under the common control of substantially the
same stockholder group. The purchase price for the acquisitions comprised $9,365
in cash (of which $200 was paid to a shareholder of Blue Giant under a
noncompete agreement), an obligation payable over three years totaling $1,105
under a noncompete agreement with a shareholder of the Blue Giant and related
expenses of $333. The purchase price was allocated to the estimated fair value
of the tangible and intangible net assets acquired, with the residual being
allocated to goodwill. The goodwill of $1,026 is being amortized on a
straight-line basis over forty years.

                                      F-10

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

The operating results of Blue Giant are included in the consolidated results of
operations since November 1, 1997. The following unaudited pro forma summary
presents the consolidated results of operations as though the acquisition of the
Company described in Note 3 had been completed and the Company had completed the
acquisition of Blue Giant on January 1 of each period presented.

                                   Year Ended December 31,
                                   -----------------------
                                      1996          1997
                                      ----          ----

   Net sales                       $ 477,254     $ 509,187
                                   ==========    =========
   Income from operations          $  17,293     $  21,583
                                   ==========    =========
   Net income                      $   1,415     $   8,320
                                   ==========    =========

HLT, Inc.

On February 28, 1997, the Company purchased substantially all of the assets of
HLT, Inc., a supplier of upright material handling equipment, for $4,948. Assets
acquired included inventory, equipment and tooling. The purchase was financed
through a short-term note which matured in the second quarter of 1997. The
Company is leasing the former company's facility and is continuing production of
the equipment, primarily for its own use. The acquisition was not significant
and pro forma data is not presented.


NOTE 5 - INVENTORIES

Inventories consist of the following:


                                        December 31,        December 31,
                                           1996                1997
                                           ----                ----

Finished equipment                       $  12,797          $   12,000
Replacement parts                           24,107              28,302
Work-in-progress                             1,402               5,356
Raw material and supplies                   22,135              25,126
                                         ---------          ----------
    Net inventories                      $  60,441          $   70,784
                                         =========          ==========


                                      F-11

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

                                        December 31,        December 31,
                                           1996                1997
                                           ----                ----

Property                                $   7,364           $    7,005
Plant                                      15,556               14,574
Equipment                                  28,779               33,854
                                        ----------          -----------
                                           51,699               55,433
Less:  Accumulated depreciation              (685)              (7,597)
                                        ----------          -----------
Net property, plant and equipment       $  51,014           $   47,836
                                        ==========          ===========

NOTE 7 - BORROWINGS, LINES OF CREDIT AND INDEBTEDNESS

Long-term debt is summarized as follows:

                                        December 31,        December 31,
                                           1996                1997
                                           ----                ----

10.75% Senior Notes due 2006             $ 130,000           $  130.000
Capital lease obligations (Note 8)           6,007                6,596
                                         ---------           ----------
Total long-term debt                       136,007              136,596
Less: current portion                        2,407                2,732
                                         ---------           ----------
Long-term debt, less current
 portion                                 $ 133,600           $  133,864
                                         =========           ==========


Senior Notes due 2006

The Senior Notes due 2006 ("Senior Notes") were issued in connection with the
acquisition of the Company and are due on November 15, 2006. The Senior Notes
are not redeemable at the Company's option prior to November 15, 2001.
Thereafter, the Senior Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon, if any, to the
applicable date of redemption, if redeemed during the 12 month period beginning
on November 15 of the years indicated below:

     Year                                    Percentage
     ----                                    ----------
     2001                                      105.375%
     2002                                      102.688%
     2003 and thereafter                       100.000%

                                      F-12


<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------


The Senior Notes also contain provision for early redemption upon the occurrence
of certain significant corporate events, including an offering of equity
securities or a change in control of the Company.

Revolving Line of Credit

The Company has entered into a $30,000 revolving credit facility (the
"Facility") with Congress Financial Corporation (the "Bank"). Borrowings under
the Facility are available for working capital and general corporate purposes,
including letters of credit. The Facility is secured by first priority liens on
all accounts receivable and inventory of the Company's domestic operations,
excluding HLT and Blue Giant.

The Facility expires in November 1999, unless extended. The interest rate per
annum applicable to the Facility is the prime rate, as announced periodically,
plus 0.50% or, at the Company's option, the adjusted Eurodollar rate plus 2.50%.
The Facility permits the Company to prepay loans and to permanently reduce
revolving credit commitments or letters of credit, in whole or in part, at any
time in certain minimum amounts. The Company is required to pay certain fees in
connection with the Facility, including a commitment fee of 0.25% on the undrawn
portion of the revolving credit commitment.

The Facility contains customary representations and warranties, and events of
default and certain other covenants. Borrowings on the Facility are classified
in the consolidated balance sheet as notes payable and were $799 and $0 at
December 31, 1997 and 1996, respectively. The average interest rate on
borrowings during 1997 was 9%.

Fair Value Disclosures

The fair value of the Company's Senior Notes at December 31, 1997 is
approximately $137,800 based on quoted market prices. The fair value of the
Senior Notes approximated carrying value at December 31, 1996. The Company
believes that the carrying value of its other borrowings approximates fair
market value based on discounted future cash flows using rates currently
available for debt with similar terms and remaining maturities.

NOTE 8 - LEASE COMMITMENTS

The Company leases certain facilities, machinery and equipment, and vehicles
with varying terms under operating leases. In most leasing arrangements, the
Company pays the property taxes, insurance, maintenance and expenses related to
the leased property.

Most of the Company's operating leases provide the Company with the option to
renew the leases for varying periods after the initial lease terms. These
renewal options enable the Company to renew the leases based upon the fair
rental values at the date of expiration of the initial lease. Total rental
expense under operating leases was as follows:

                                      F-13

<PAGE>


CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

  Year ended December 31, 1997                              $   2,807
                                                            =========
  One month ended December 31, 1996                         $     191
                                                            =========
  Eleven months ended November 26, 1996                     $   1,886
                                                            =========
  Year ended December 31, 1995                              $   2,557
                                                            =========

The Company also routinely enters into sale-leaseback arrangements for certain
equipment, which is similarly sold to third-party customers under sales-type
lease agreements. The Company maintains a net investment in these leases,
represented by the present value of payments receivable under the leases. The
Company's net investment in sales-type leases was $7,901 and $7,517 at December
31, 1997 and 1996, respectively, and is included in other current and
non-current assets on the consolidated balance sheet.

In connection with the original sale-leaseback arrangements underlying the
customer lease program, the Company has an outstanding rental installment
obligation which is recorded based on the present value of minimum payments due
under the leases of $6,596 of which $2,732 is current at December 31, 1997.

Future minimum capital and noncancelable operating lease payments and the
related present value of capital lease payments at December 31, 1997 are as
follows:


                                                      Capital     Operating
                                                      Leases       Leases
                                                      ------       ------

1998                                                 $  2,446     $  3,139
1999                                                    2,001        2,439
2000                                                    1,556        2,023
2001                                                    1,038        1,454
2002                                                      371        1,314
Thereafter                                                  -           29
                                                     --------     --------
     Total minimum obligations                          7,412     $ 10,398
                                                                  ========
Less amount representing interest                         816
                                                     --------
     Present value of net minimum obligations           6,596
Less current portion                                    2,732
                                                     --------
     Long-term obligations                           $  3,864
                                                     ========


                                      F-14

<PAGE>

CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

NOTE 9 - INCOME TAXES

The components of income (loss) before income taxes and extraordinary items are
as follows:

<TABLE>
<CAPTION>
                                                                  Eleven                 One
                                              Year                Months                Month                Year
                                              Ended                Ended                Ended                Ended
                                          December 31,         November 26,         December 31,         December 31,
                                              1995                 1996                 1996                 1997
                                              ----                 ----                 ----                 ----

<S>                                          <C>                 <C>                 <C>                   <C>         
United States                                $   (16,405)        $      2,541    |   $         165         $      4,080
Foreign                                             (866)              (4,636)   |             370                4,275
                                         ----------------     ----------------   | ----------------     ----------------
Income (loss) before income taxes                                                |
 and extraordinary items                     $   (17,271)        $     (2,095)   |   $         535         $      8,355
                                         ================     ================   | ================     ================
</TABLE>

As a result of the Predecessor's operating losses for book and tax purposes,
provision (benefit) for income taxes for the year ended December 31, 1995 and
the eleven months ended November 26, 1996 were minimal, relating primarily to
state or foreign jurisdictions where taxable income occurred but net operating
loss ("NOL") carryforwards were limited.

Provisions for income taxes during the year ended December 31, 1997 and the one
month ended December 31, 1996 relate to state and local income taxes. The
Company did not provide for federal income taxes during the year ended December
31, 1997 and the one month period ended December 31, 1996 as the result of
incurring a taxable loss in the United States and utilizing NOL carryforwards to
offset taxable income in foreign jurisdictions.

The provision for income taxes is different from the amount which would be
provided by applying the statutory federal income tax rate to income (loss)
before income taxes and extraordinary items. The reasons for the difference are
summarized below:

<TABLE>
<CAPTION>
                                                                      Eleven                      One
                                                   Year                Months                     Month                Year
                                                   Ended                Ended                     Ended                Ended
                                                December 31,         November 26,              December 31,         December 31,
                                                   1995                 1996                      1996                 1997
                                                   ----                 ----                      ----                 ----

<S>                                            <C>                  <C>                      <C>                   <C>         
Expected income tax at U.S. Federal
 rates                                         $     (6,045)        $       (712)      |     $         182         $      2,841
NOL with no current benefit                           5,651                1,575       |                 -                    -
Foreign NOL carryforward benefit                          -                    -       |              (166)              (1,987)
Benefit of domestic NOL                                   -                 (863)      |               (56)              (1,387)
Foreign tax differential on income/                                                    | 
 losses of foreign subsidiaries                         303                    -       |                40                  533
State and local taxes                                     -                    -       |                 -                  484
Other                                                   239                    -       |                 -                    -
                                            ----------------     ----------------      |   ----------------     ----------------
                                                                                       |
    Total provision for income taxes           $        148         $          -       |     $           -         $        484
                                            ================     ================      |   ================     ===============
</TABLE>


                                      F-15

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

The tax effects of the basis differences and NOL carryforwards as of December
31, 1997 and December 31, 1996 are summarized below:

<TABLE>
<CAPTION>
                                                       December 31,        December 31,
                                                          1996                1997
                                                          ----                ----

<S>                                                    <C>                 <C>       
Property, plant and equipment                          $     (81)          $  (1,846)
Goodwill                                                       -                (942)
                                                       ----------          ----------
      Total deferred tax liabilities                         (81)             (2,788)
                                                       ----------          ----------

Warranties and product liability                          19,602              21,478
Net inventories                                            2,586                 975
Receivables                                                  536                 414
Other                                                      2,330               1,620
Benefit of net operating loss carryforwards               19,506              19,293
                                                       ----------          ----------
      Total deferred tax assets                           44,560              43,780
                                                       ----------          ----------
Deferred tax valuation allowance                         (44,479)            (40,992)
                                                       ----------          ----------
      Net deferred taxes                               $       -           $       -
                                                       ==========          ==========
</TABLE>


Basis differences between the amounts assigned to net assets for financial
reporting purposes and the amounts assigned for tax purposes resulted in a net
deferred tax asset of $40,992. In light of the Company's and Predecessor's
operating history, management provided a valuation allowance in the same amount.

At December 31, 1997, the Company had U.S. federal NOL carryforwards of $3,049
which begin to expire in 2011.

In addition, the Company's foreign subsidiaries have approximately $43,036 of
loss carryforwards, $18,407 in corporate losses for Germany, $20,763 in
municipal losses for Germany and $3,866 in other countries, which are available
to offset future foreign taxable income. The loss carryforwards in Germany are
available without expiration. The loss carryforwards in other countries expire
in the years 1998 through 2001.

                                      F-16

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

NOTE 10 - RETIREMENT PLANS

Pension Plans

Certain of the Company's German employees are covered by noncontributory defined
benefit pension plans. The Company also maintains separate pension benefit plans
for German executive employees and for other staff. The executive pension plans
are based on final pay and service, and, in some cases, are dependent on social
security pensions while the other staff plans are based on fixed amounts applied
to the number of years of service rendered. The plans are unfunded.

The components of pension expense relating to defined benefit plans for each of
the reporting periods covered by these financial statements are as follows:

<TABLE>
<CAPTION>

                                                                Eleven                One
                                             Year               Months                Month                Year
                                             Ended              Ended                 Ended                Ended
                                         December 31,         November 26,         December 31,         December 31,
                                             1995                 1996                 1996                 1997
                                             ----                 ----                 ----                 ----

<S>                                      <C>                  <C>                  <C>                  <C>           
Current service cost                     $           57       $           38   |   $            2       $           37
Interest cost                                       886                  840   |               52                  837
Net amortization and deferrals                     (927)                 107   |                7                    -
                                        ----------------     ----------------  |  ----------------     ----------------
                                         $           16        $         985   |   $           61        $         874
                                        ================     ================  |  ================     ================
</TABLE>

The  following  table  summarizes  the funded  status of the  Company's  defined
benefit pension plans to the amounts recognized in the financial statements:

                                                  December 31,   December 31,
                                                     1996           1997
                                                     ----           ----

Projected benefit obligations                      $  12,379      $  11,073
                                                   ---------      ---------
Accrued pension cost                               $  12,379      $  11,073
                                                   =========      =========

The accumulated  benefit obligations do not differ materially from the projected
benefit obligations.

                                      F-17

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

A discount rate of 7.5% was used in 1997 and 1996 to determine the projected
benefit obligations.

Savings Plans

The Company sponsors various tax deferred savings plans into which eligible
employees may elect to contribute a portion of their compensation. Generally,
the Company matches contributions up to a maximum of 3% of compensation. In
connection with the required match, the Company's contribution to the plan was
$512, $30, $237 and $283 for the year ended December 31, 1997, for the one month
ended December 31, 1996, for the eleven months ended November 26, 1996 and for
the year ended December 31, 1995, respectively.

Other Postemployment Benefits

The Company does not have any benefit programs which provide retiree health or
life insurance benefits.


NOTE 11 - LITIGATION, COMMITMENTS AND CONTINGENCIES

In the normal course of business, lawsuits have been filed alleging damages for
accidents relating to use of the Company's products. As part of the acquisition
of the Predecessor, the Company assumed both the outstanding and future product
liability exposures related to such operations. As of December 31, 1997, there
were 76 lawsuits outstanding alleging damages for injuries or deaths arising
from accidents involving forklift products. Most of the foregoing suits are in
various stages of pretrial completion, and certain plaintiffs are seeking
punitive as well as compensatory damages. The Company is self-insured, up to
certain limits, for these product liability exposures, as well as for certain
exposures related to general, workers' compensation and automobile liability.
Insurance coverage is obtained for catastrophic losses as well as those risks
required to be insured by law or contract. The Company has recorded and
maintains an estimated liability, based in part upon actuarial determinations,
in the amount of management's estimate of the Company's aggregate exposure for
such self-insured risks.

The Company is involved in various other legal proceedings which have arisen in
the normal course of business. The Company has recorded provisions for estimated
losses in circumstances where a loss is probable and the amount or range of
possible amounts of the loss is estimable.

The Company is contingently liable as a guarantor for certain of its dealers'
financing arrangements with a financial institution. In certain circumstances of
dealer default, the Company is obligated to: a) repurchase new equipment
financed under dealer floor plan obligations and b) purchase dealers' long-term
rental equipment contracts with customers for which financing has been provided
by the financial institution to the dealer. The guarantees





                                      F-18

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

under these financing arrangements aggregated approximately $25,000 and
$110,000, respectively, at December 31, 1997. When a dealer default does occur,
a newly selected dealer generally assumes the assets of the prior dealer and any
related financial obligations. Historically, the Company and the Predecessor
have incurred only minimal losses relating to these arrangements.

The Company is contingently liable for a portion of the residual value of
machines sold by the Company to an independent company which subsequently leases
those machines to third parties for terms generally ranging from three to five
years. Historically, the Company and the Predecessor have made a profit on the
subsequent resale of repurchased machines. At December 31, 1997, the maximum
contingent liability was approximately $6,273. At December 31, 1997 and December
31, 1996, there were $1,887 and $1,188, respectively, of repurchased machines
included in inventory.

The Company is contingently liable on guarantees given by the Predecessor to
financial institutions relating to loans and other dealer and customer
obligations arising in the ordinary conduct of its business. Such guarantees
approximated $2,272 at December 31, 1997. Estimated losses, if any, on such
guarantees are accrued as a component of the allowance for doubtful accounts.
Historically, the Company and the Predecessor have not incurred material losses
on these guarantees.

The Company's outstanding letters of credit totaled $1,084 at December 31, 1997.
The letters of credit generally serve as collateral for certain liabilities
included in the balance sheet. Certain of the letters of credit serve as
collateral guaranteeing the Company's performance under contracts.

The Company is a wholly-owned subsidiary of Holdings. Other than its investment
in the Company, Holdings has no other substantive business activities or
operations. Holdings has financed its investment in the Company through the
issuance of $7,000 of Junior Subordinated Debentures, bearing interest at 12%
per annum and maturing 2007, $17,000 of preferred stock with an annual
cumulative dividend of 12% and $1,000 of common stock. Although the Company has
not guaranteed Holdings' debt or preferred stock dividend obligations, or
otherwise assumed such obligations, Holdings will look to the Company's assets
and cash flows to meet its interest, debt and dividend obligations when and if
they are paid.


                                      F-19

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

NOTE 12 - RELATED PARTY TRANSACTIONS

The following table  summarizes  related party  transactions  conducted with the
Parent Company:

<TABLE>
<CAPTION>
                                                                  Eleven                 One
                                              Year                Months                Month                Year
                                              Ended                Ended                Ended                Ended
                                           December 31,         November 26,         December 31,         December 31,
                                              1995                 1996                 1996                 1997
                                              ----                 ----                 ----                 ----

<S>                                       <C>                  <C>                 <C>                   <C>         
Distribution and parts warehousing                                             |
 expenses                                 $      7,088         $      6,100    |   $         490         $      5,580
Management fee allocation                        6,996                5,672    |               -                    -
Interest expense                                16,145               14,656    |               -                    -
Interest income                                    480                  150    |               -                    -

</TABLE>


NOTE 13 - GEOGRAPHIC SEGMENT INFORMATION

<TABLE>
<CAPTION>
                                                              Eleven                 One
                                          Year                Months                Month                Year
                                          Ended                Ended                Ended                Ended
                                       December 31,         November 26,         December 31,         December 31,
                                          1995                 1996                 1996                 1997
                                          ----                 ----                 ----                 ----

<S>                                      <C>                  <C>                 <C>                   <C>        
Sales
   North America                         $   385,611          $   286,992         $     31,480          $   388,185
   Europe                                    162,396              126,045               15,787              134,437
   All other                                     116                   85                  231                3,829
   Eliminations                              (19,364)              (8,493)                (735)             (37,157)
                                     ----------------     ----------------     ----------------     ----------------
        Total                            $   528,759          $   404,629         $     46,763          $   489,294
                                     ================     ================     ================     ================

Income (loss) from operations
   North America                        $       (523)        $     10,307         $      1,389         $     17,164
   Europe                                      3,973                3,664                  571                4,741
   All other                                    (379)                (688)                 (25)                (768)
   Eliminations                                   (4)                   -                    -                 (103)
                                     ----------------     ----------------     ----------------     ----------------
        Total                           $      3,067         $     13,283         $      1,935         $     21,034
                                     ================     ================     ================     ================
Indentifiable assets
   North America                        $     95,107         $     98,553          $   265,472          $   305,184
   Europe                                    101,054               96,595               89,861               79,249
   All other                                   9,650               10,353               10,161                6,839
   Eliminations                              (13,102)             (12,794)             (64,187)             (78,018)
                                     ----------------     ----------------     ----------------     ----------------
        Total                            $   192,709          $   192,707          $   301,307          $   313,254
                                     ================     ================     ================     ================
</TABLE>

Sales between geographic areas are generally priced to recover costs plus a
reasonable markup for profit. Operating income equals net sales less direct and
allocated operating expenses, excluding interest and other nonoperating items.



                                      F-20

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

The Company is not dependent upon any single customer.


NOTE 14 - SEVERANCE ACTIONS

The Predecessor announced personnel reductions totaling approximately 134
employees in the North American operations during 1995 as a continuation of the
Predecessor's programs to increase manufacturing efficiency, reduce costs and
improve liquidity. The Predecessor recorded a combined charge of $3,478 in 1995
for severance costs associated with these actions and additional costs
associated with the closing of certain administrative and warehouse facilities.
Also during 1995, the Predecessor recorded a charge of $2,500 to recognize the
impairment in value of certain properties held for sale in Korea.


NOTE 15 - FINANCIAL  INFORMATION  FOR SUBSIDIARY  GUARANTORS  AND  NON-GUARANTOR
SUBSIDIARIES

The Company conducts a portion of its business through subsidiaries. The Senior
Notes referred to in Note 7 are unconditionally guaranteed, jointly and
severally, by certain subsidiaries (the "Subsidiary Guarantors") which presently
constitute HLT and BGU operations. Certain of the Company's subsidiaries do not
guarantee the Senior Notes (the "Non-Guarantor Subsidiaries"), presently the
Company's foreign subsidiaries.

Presented below is condensed financial information for the Company, the
Subsidiary Guarantors and the Non-Guarantor Subsidiaries at December 31, 1997.

The equity method has been used by the Company with respect to investments in
subsidiaries. Separate financial statements for Subsidiary Guarantors are not
presented based on management's determination that they do not provide
additional information that is material to investors.

                                      F-21

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
 Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                    Consolidating Balance Sheet
                                                         December 31, 1997

                                                        CLARK Material
                                                       Handling Company                       Non-
                                                       (Parent Company       Subsidiary    Guarantor
                                                             Only)           Guarantors   Subsidiaries   Eliminations  Consolidated
                                                      -----------------     -----------   ------------   ------------  ------------
<S>                                                   <C>                    <C>           <C>           <C>            <C>       
Current assets
   Cash and cash equivalents                          $          70          $        1    $    6,263    $         -    $    6,334
   Cash securing letters of credit                                -                   -           320              -           320
   Trade receivables                                         24,224               3,081        19,713              -        47,018
   Affiliate accounts receivable                              4,900              11,982           189        (17,071)            -
   Net inventories                                           47,331               5,106        18,347              -        70,784
   Other current assets                                       1,614                 552         5,115              -         7,281
                                                      --------------         ----------   -----------    -----------    -----------

        Total current assets                                 78,139              20,722        49,947        (17,071)      131,737

Long term assets
   Property, plant and equipment-net                         18,275              1,639         27,922              -        47,836
   Goodwill                                                 113,861              1,026              -              -       114,887
   Investment in affiliates                                  60,844                  -              -        (60,844)            -
   Other assets                                               9,638              1,178          7,978              -        18,794
                                                      --------------        ----------   ------------    -----------   -----------

        Total assets                                  $     280,757         $   24,565    $    85,847    $   (77,915)  $   313,254
                                                      ==============        ==========   ============    ===========   ===========

Current liabilities
   Notes payable                                      $       1,261         $       -     $     1,923    $         -   $     3,184
   Current portion of capital lease obligations                   -                 -           2,732              -         2,732
   Trade accounts payable                                    44,437             3,664          13,901              -        62,002
   Affiliate accounts payable                                12,043             1,680           2,707        (16,430)            -
   Accrued compensation and benefits                          3,051               503           2,176              -         5,730
   Accrued warranties and product liability                  19,345               196           1,233              -        20,774
   Other current liabilities                                  4,424               303           6,001              -        10,728
                                                      --------------       ----------    ------------    -----------   -----------

        Total current liabilities                            84,561             6,346          30,673        (16,430)      105,150

Non-current liabilities
   Senior notes payable                                     130,000                 -               -              -       130,000
   Capital lease obligations, less current portion                -                 -           3,864              -         3,864
   Accrued warranties and product liability                  38,497                 -               -              -        38,497
   Other non-current liabilities                                730             7,168           4,745           (641)       12,002
                                                      --------------      -----------    ------------    -----------   -----------

        Total liabilities                                   253,788           13,514           39,282        (17,071)      289,513
                                                      --------------      -----------    ------------    -----------   -----------


Commitments and contingencies                                     -                -               -              -              -

Stockholder's equity
   Common stock                                                   1                -               -              -              1
   Paid-in-capital                                           24,999                -               -              -         24,999
   Retained earnings                                          1,969            1,741           4,696              -          8,406
   Subsidiary investment                                          -            9,310          51,534        (60,844)             -
   Cumulative translation adjustment                              -                -          (9,665)             -         (9,665)
                                                      --------------      ----------   -------------    -----------    -----------

     Total stockholder's equity                              26,969           11,051          46,565        (60,844)        23,741
                                                      --------------      ----------   -------------    -----------    -----------

     Total liabilities and stockholder's equity       $     280,757       $   24,565   $      85,847    $   (77,915)   $   313,254
                                                      ==============      ==========   =============    ===========    ===========
</TABLE>

                                      F-22

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses 
 Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

                                          Consolidating Statement of Operations
                                              Year Ended December 31, 1997
<TABLE>
<CAPTION>

                                                     CLARK Material
                                                     Handling Company                       Non-
                                                     Parent Company     Subsidiary       Guarantor
                                                           Only)        Guarantors      Subsidiaries     Eliminations   Consolidated
                                                     --------------    ------------    -------------    -------------   ------------
<S>                                                  <C>               <C>             <C>              <C>             <C>        
Net sales                                            $   358,103       $     27,849    $     140,499    $    (37,157)   $   489,294
Cost of goods sold                                       316,068             24,579          127,535         (37,055)       431,127
                                                     ------------      ------------    -------------    -------------   ------------


        Gross profit                                      42,035              3,270           12,964            (102)        58,167

Engineering, selling and administrative expenses          26,918              1,399            8,816               -         37,133
                                                     ------------      ------------    -------------    -------------   ------------

        Income from operations                            15,117              1,871            4,148            (102)        21,034

Other income (expense):
   Interest income                                           699                  8              102               -            809
   Interest expense                                      (14,480)               (48)            (558)              -        (15,086)
   Other income - net                                        907                  6              685               -          1,598
                                                     ------------      ------------    -------------    -------------   ------------

        Income before income taxes                         2,243              1,837            4,377            (102)         8,355

Equity in earnings of subsidiaries                         5,952                  -                -          (5,952)             -
Provision for income taxes                                   324                105               55               -            484
                                                     ------------      ------------    -------------    -------------   ------------


Net income                                           $     7,871       $      1,732    $       4,322    $     (6,054)   $     7,871
                                                     ============      ============    =============    =============   ============
</TABLE>


                                      F-23

<PAGE>

CLARK Material Handling Company
 and Predecessor Businesses
 Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

                                     Consolidating Statement of Cash Flows
                                         Year Ended December 31, 1997
<TABLE>
<CAPTION>

                                                                    CLARK Material
                                                                   Handling Company                      Non-
                                                                   (Parent Company     Subsidiary     Guarantor
                                                                        Only)          Guarantors    Subsidiaries     Consolidated
                                                                   ---------------     ----------    ------------     ------------

<S>                                                                 <C>                <C>            <C>              <C>      
Net cash provided by operating activities                           $       3,347      $     326      $    7,436       $  11,109
                                                                    -------------      ---------      ----------       ---------


Investing activities:
      Business combinations                                               (14,646)             -               -         (14,646)
      Capital expenditures                                                 (4,532)          (325)         (1,483)         (6,340)
                                                                    -------------      ---------      ----------       ---------

          Net cash used in investing activities                           (19,178)          (325)         (1,483)        (20,986)
                                                                    -------------      ---------      ----------       ---------


Financing activities:
      Issuance of current notes payable                                       822              -             360           1,182
      Repayment of current notes payable                                        -              -          (1,020)         (1,020)
      Other, net                                                                -              -             147             147
                                                                    -------------      ---------      ----------       ---------


          Net cash provided by (used in) financing activities                 822              -            (513)            309
                                                                    -------------      ---------      ----------       ---------


Effect of exchange rate changes on cash and
 cash equivalents                                                               -              -            (652)           (652)
                                                                    -------------      ---------      ----------       ---------


Net increase (decrease) in cash and cash equivalents                      (15,009)             1           4,788         (10,220)
Cash and cash equivalents at beginning of period                           15,079              -           1,475          16,554
                                                                    -------------      ---------      ----------       ---------


Cash and cash equivalents at end of period                          $          70      $       1      $    6,263       $   6,334
                                                                    =============      =========      ==========       =========
</TABLE>

                                      F-24


<PAGE>


NOTE 16 - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
                                                       Balance
                                                          at                                                        Balance
                                                      beginning                          (1)           (2)           at end
                                                      of period       Provision         Other       Deductions     of period
                                                      ---------       ---------         -----       ----------     ---------
Allowance for Doubtful Accounts

The Company
-----------

<S>                                                  <C>              <C>            <C>            <C>            <C>     
Year ended December 31, 1997                         $    2,215       $     27       $    (123)     $    (213)     $  1,906

One month ended December 31, 1996                         2,063            164             (12)            -          2,215


The Predecessor
---------------

Eleven months ended November 26, 1996                     2,867            59              (48)         (740)         2,138

Year ended December 31, 1995                              3,600             -               71          (804)         2,867


(1)  Effect of exchange rate
(2)  Utilization of established reserves,
        net of recoveries

</TABLE>

<PAGE>

EXHIBIT INDEX
Exhibit                                     Description
No.

3.1    Certificate of Incorporation, as amended, of the Company (incorporated by
       reference to Exhibit 3.1 to the Company's  Registration Statement on Form
       S-4, Registration No. 333-18957)

3.2    By-laws of the Company  (incorporated  by reference to Exhibit 3.2 to the
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

4.1    Indenture  dated as of November  27, 1996  between the Company and United
       States Trust Company of New York, as Trustee  (incorporated  by reference
       to  Exhibit  4.1 to the  Company's  Registration  Statement  on Form S-4,
       Registration No. 333-18957)

4.2    Registration  Rights  Agreement  dated as of November  27, 1996 among the
       Company,  Jefferies  &  Company,  Inc.  and  Bear,  Stearns  &  Co.  Inc.
       (incorporated  by reference to Exhibit 4.2 to the Company's  Registration
       Statement on Form S-4, Registration No. 333-18957)

4.3    Form  of  103/4%  Senior  Notes  due  2006   (included  in  Exhibit  4.1)
       (incorporated  by reference to Exhibit 4.3 to the Company's  Registration
       Statement on Form S-4, Registration No. 333-18957)

10.1   Purchase Agreement dated November 22, 1996 among the Company, Jefferies &
       Company, Inc. and Bear, Stearns & Co. Inc.  (incorporated by reference to
       Exhibit  10.1  to the  Company's  Registration  Statement  on  Form  S-4,
       Registration No. 333-18957)

10.2   Loan and  Security  Agreement  dated  November  27,  1996 by and  between
       Congress Financial Corporation and the Company (incorporated by reference
       to Exhibit  10.2 to the  Company's  Registration  Statement  on Form S-4,
       Registration No. 333-18957)

10.3   Stock and Asset Purchase and Sale Agreement, dated as of November 9, 1996
       among Terex Corporation,  and certain of its subsidiaries and the Company
       (incorporated by reference to Exhibit 10.3 to the Company's  Registration
       Statement on Form S-4, Registration No. 333-18957)

10.4   Service Agreement dated as of November 27, 1996 between Terex Corporation
       and  the  Company  (incorporated  by  reference  to  Exhibit  10.4 to the
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

10.5   Indemnity  as to Letters  of Credit,  Performance  Bonds,  Appeal  Bonds,
       Guaranties, etc. dated November 27, 1996 by the Company in favor of Terex
       Corporation,  for itself and as successor to CMH Acquisition  Corp.,  CMH
       Acquisition  International  Corp.,  CLARK Material  Handling  Company and
       CLARK Material Handling International, Inc. (incorporated by reference to
       Exhibit  10.5  to the  Company's  Registration  Statement  on  Form  S-4,
       Registration No. 333-18957)

10.6   Employment  Agreement dated as of November 27, 1996 between  Holdings and
       Dr.  Martin M. Dorio  (incorporated  by  reference to Exhibit 10.6 to the
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

10.7   Tax Sharing  Agreement made as of November 27, 1996 between  Holdings and
       the Company  (incorporated  by reference to Exhibit 10.7 to the Company's
       Registration Statement on Form S-4, Registration No. 333-18957)

10.8   Stock Purchase Agreement,  dated as of May 27, 1992, by and between CLARK
       Equipment  Company and Terex  Corporation  (incorporated  by reference to
       Exhibit  10.8  to the  Company's  Registration  Statement  on  Form  S-4,
       Registration No. 333-18957)

10.9   First  Amendment to the Stock  Purchase  Agreement,  dated as of July 31,
       1992,  by and  between  CLARK  Equipment  Company  and Terex  Corporation
       (incorporated by reference to Exhibit 10.9 to the Company's  Registration
       Statement on Form S-4, Registration No. 333-18957)

10.10  Trademark Assignment Agreement, dated as of July 31, 1992, by and between
       CLARK Equipment Company and CLARK Material Handling Company (incorporated
       by reference to Exhibit 10.10 to the Company's  Registration Statement on
       Form S-4, Registration No. 333-18957)

10.11  Second Amended and Restated General Operating  Agreement,  dated November
       29,  1990,  by and  between  CLARK  Material  Handling  Company and Chase
       Manhattan  Leasing  Company,  Inc.  (incorporated by reference to Exhibit
       10.11 to the Company's  Registration  Statement on Form S-4, Registration
       No. 333-18957)

10.12  Second  Amendment to the Second  Amended and Restated  General  Operating
       Agreement,  dated April 15, 1994,  by and among CLARK  Material  Handling
       Company,   Drexel   

<PAGE>

       Industries,  Inc. and CLARK Credit Corporation (incorporated by reference
       to Exhibit  10.12 to the  Company's  Registration  Statement on Form S-4,
       Registration No. 333-18957)

10.13  Third  Amendment  to the Second  Amended and Restated  General  Operating
       Agreement,  dated August 1, 1994, by and between CLARK Material  Handling
       Company  and CLARK  Credit  Corporation  (incorporated  by  reference  to
       Exhibit  10.13  to the  Company's  Registration  Statement  on Form  S-4,
       Registration No. 333-18957)

10.14  Assignment of Second Amended and Restated  General  Operating  Agreement,
       dated March 22, 1995, by and between  CLARK  Material  Handling  Company,
       CLARK Credit  Corporation,  f/k/a Chase Manhattan  Leasing  Company,  and
       Associates Commercial  Corporation  (incorporated by reference to Exhibit
       10.14 to the Company's  Registration  Statement on Form S-4, Registration
       No. 333-18957)

10.15  Master  Software  License  and  Service  Agreement,  dated May 17,  1996,
       between CLARK Material Handling Company and SDRC Operations (incorporated
       by reference to Exhibit 10.15 to the Company's  Registration Statement on
       Form S-4, Registration No. 333-18957)

10.16  Letter Agreement, dated October 26, 1995, between CLARK Material Handling
       Company,  Manufacturers  Distribution  Services,  Inc.  and Maine  Rubber
       International   (incorporated  by  reference  to  Exhibit  10.16  to  the
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

10.17  MCI  Services  Agreement,  effective  as of July  1,  1995,  between  MCI
       Telecommunications   Corporation  and  CLARK  Material  Handling  Company
       (incorporated by reference to Exhibit 10.17 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957)

10.18  Agreement  for Systems  Operations  Services,  dated as of March 2, 1992,
       between CLARK Material Handling Company and Integrated  Systems Solutions
       Corporation,  as amended by  Amendments  #1 through #5  (incorporated  by
       reference to Exhibit  10.18 to the  Company's  Registration  Statement on
       Form S-4, Registration No. 333-18957)

10.19  Supply  Agreement,  dated  December  14,  1994,  between  CLARK  Material
       Handling  Company  and  Funk  Manufacturing   Company   (incorporated  by
       reference to Exhibit  10.19 to the  Company's  Registration  Statement on
       Form S-4, Registration No. 333-18957)

10.20  Supply  Agreement,  dated July 1, 1995,  between CLARK Material  Handling
       Company and Funk  Manufacturing  Company  (incorporated  by  reference to
       Exhibit  10.20  to the  Company's  Registration  Statement  on Form  S-4,
       Registration No. 333-18957)


10.21  Agreement,  dated June 1,  1983,  between  CLARK  Equipment  Company  and
       Mitsubishi Corporation,  Mitsubishi Heavy Industries, Ltd. and Mitsubishi
       Motors  Corporation,  as amended  (incorporated  by  reference to Exhibit
       10.24 to the Company's  Registration  Statement on Form S-4, Registration
       No. 333-18957)

10.22  Master Contract for Purchase and Sale, dated July 17, 1995, between CLARK
       Material  Handling  Company  and Custom  Tool and  Manufacturing  Company
       (incorporated by reference to Exhibit 10.25 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957)

10.23  Supply  Agreement,  dated  December  20,  1991,  between  CLARK  Material
       Handling Company and Dixson,  Inc.  (incorporated by reference to Exhibit
       10.26 to the Company's  Registration  Statement on Form S-4, Registration
       No. 333-18957)

10.24  Lease Agreement,  dated as of April 15, 1987, between Vergil D. Kelly and
       Kenny  Angelucci  and CLARK  Equipment  Company with respect to 172 Trade
       Street,  Lexington,  Kentucky,  as amended by Amendment #1 to Lease dated
       April  15,  1987  (incorporated  by  reference  to  Exhibit  10.27 to the
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

10.25  Standard Form Dealer Sales  Agreements, between CLARK  Material  Handling
       Company and  domestic  dealer  entities  (incorporated  by  reference  to
       Exhibit  10.28  to the  Company's  Registration  Statement  on Form  S-4,
       Registration No. 333-18957)

10.26  Agreement,  dated as of September 12, 1995, by and between CLARK Material
       Handling   Company  and  Nissan  Forklift   Corporation,   North  America
       (incorporated by reference to Exhibit 10.29 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957)

10.27  License  Agreement,  dated as of November 27, 1996,  between Holdings and
       the Company  (incorporated by reference to Exhibit 10.30 to the Company's
       Registration Statement on Form S-4, Registration No. 333-18957)

10.28  Asset  Purchase  Agreement,  dated as of November 6, 1997,  between Clark
       Material Handling of Canada Ltd. and Blue Giant Limited.

<PAGE>


10.29  Asset Purchase Agreement, dated as of October 31, 1997, between Blue
       Giant Corporation and Blue Giant USA Corporation.

21.1   Subsidiaries of the Company

27     Financial Data Schedule